Refugee emergency: temporary EU relocation

Yesterday, the interior ministers of the EU member states reached a decision on one important solidarity measure in the face of the refugee emergency: temporary relocation to alleviate the burden of Greece and Italy.

International protection – temporary measures

On 17 September 2015 the European Parliament had adopted its favourable opinion (text here P8_TA-PROV(2015)0324) on the emergency proposal for temporary relocation, and yesterday (22 September) theJustice and Home Affairs (JHA) Council adopted this important proposal from the refugee and migration agenda of the European Commission.

With regard to solidarity it is worth noticing that Ireland has expressed its intention to participate, while Denmark and the United Kingdom remain bystanders.

We note that Hungary was intended to be a beneficiary in the Commission proposal for a Council decision establishing provisional measures in the area of international protection for the benefit of Italy, Greece and Hungary, COM(2015) 451 final (plus annexes).

At the time of writing the adopted decision – renamed and adapted after Hungary declined help - had not been published in the OfficialJournal of the European Union (OJEU), but available through a link on the web page of the JHA Council meeting:

COUNCIL DECISION establishing provisional measures in the area of international protection for the benefit of Italy and Greece (document 12098/15)

In a nutshell

The web page of the JHA Council meeting explains the decision in a nutshell:

This decision establishes a temporary and exceptional relocation mechanism over two years from the frontline member states Italy and Greece to other member states. It will apply to 120 000 persons in clear need of international protection who have arrived or are arriving on the territory of those member states as from six months before the entry into force until two years after the entry into force.

According to the decision, 66 000 persons will be relocated from Italy and Greece (15 600 from Italy and 50 400 from Greece) . The remaining 54 000 persons will be relocated from Italy and Greece in the same proportion after one year of the entry into force of the decision.

During the press conference (video) Jean Asselborn, Luxembourg's minister for immigration and asylum, admitted that the Council did not achieve consensus, but the qualified majority went well beyond the requirements of the treaties.

As for other legal acts, all member states are expected to implement the decision. However, the decision can be adapted for a member state facing an emergency situation.

European Council

Today, 23 September 2015, the members of the European Council meet informally to discuss an overall approach to the refugee crisis and the necessity to establish a credible European migration policy.

In his invitation letter, EUCO president Donald Tusk is also appealing to EU leaders to urgently provide financial donations to the World Food Programme for food support to the 11 million people in Syria and in the region.

Ralf Grahn

Euro crash or rescue?

We have gone from a crisis in the eurozone to a crisis of the euro area and currency.

A stark warning from The Economist. According to the the Free exchange blog, the eurozone is in a death spiral. Only a guarantee for sovereign debt from the European Central Bank and a major commitment from the core economies to bail out the periphery, plus substantial labour market, public-sector, and tax reforms in the weak economies, can prevent financial collapse and break-up.

The United States, China, Russia, the United Kingdom and others have told the eurozone to put its house in order before they put fresh money on the table.


Germany and France

The German chancellor Angela Merkel and the French president Nicolas Sarkozy have claimed leadership of the eurozone, bilaterally, through the new eurozone summit structure recently endorsed (point 7) and the Frankfurt group.

Merkel and Sarkozy are thus the ones to judge on the outcomes at eurozone level, including how they approach new responsibilities for the ECB.

According to Reuters UK, Merkel and Sarkozy are preparing for something else: a retrenched, core country eurozone heading toward deeper economic integration, including on tax and fiscal policy.


Multi-speed Europe?

Splitting the euro area would mean the emergence of an increasingly multi-speed Europe: 1) the core euro area, 2) the dropouts, 3) the prospective entrants (Sweden?), 4) Denmark and the United Kingdom with opt-outs, as well as 5) countries joining the European Union at some point.

EU Treaty changes need the agreement and ratification of all member states, hardly a piece of cake. There are no indications of democratic government at the level of such a core eurozone (outside EU structures), but the more monumental a question, the less transparency and good governance are in evidence.

Paradoxically, where intergovernmentalism has failed, Merkel and Sarkozy seem to contemplate more of the same.


Second update 10 November 2011: Ulrike Guérot of the ECFR writes about the stubborn refusal to advance on the road of European democracy and legitimacy: Germany in Europe: the politics of disintegration.


The Wall Street Pit discusses the Franco-German plans, putting emphasis on if the European Central Bank will act to prevent meltdown in Greece and Italy or concentrate on curtailing losses.

The governance conundrum would became even more tangled, already comprising: The so called market forces, the individual EU member states, Angela Merkel and Nicolas Sarkozy who have claimed leadership, the Frankfurt group, the Euro Group (17 or less) and chairman Jean-Claude Juncker, the euro summits (17or less) and president Herman Van Rompuy, the Ecofin Council (all 27 member states) and the Council presidency (Poland), the European Council (27) and president Herman Van Rompuy, the European Central Bank and president Mario Draghi, the European Commission through president José Manuel Barroso and Ecfin commissioner Olli Rehn, the G20 and its members, and the IMF.


Update 10 November 2011): More thoughts on the subject are offered by Charlemagne's notbook (The Economist) in: Two-speed Europe, or two Europes? - Let me add that president Sarkozy has shown that he does not understand the intrinsically democrativc nature of ”federalism”.


Greece and Italy have been very much parts of the problem these last days, because they have lost the trust of markets and politicians.


Greece

According to BBC News Europe, the discussions to form a government of national unity keep rumbling on in Greece.


Italy

By yesterday Italian state bonds had become ruinously expensive, but according to Reuters there are some signs that the parliament would pass emergency legislation within the next days and that prime minister Silvio Berlusconi would make way for a government of national unity, headed by Mario Monti.

If Greece and Italy fail, the crash of the euro may take down other countries as well.



Ralf Grahn

Eurozone reports and reactions – Italy hot stuff

Yesterday evening the chairman of the Euro Group, Jean-Claude Juncker, held a press conference (recorded, including questions and answers 35:33), together with the Commission vice-president Olli Rehn and the EFSF chief executive officer Klaus Regling.


Media reports and reactions

We take a look at some reports and reactions in the media regarding the eurozone meeting.

Bloomberg reports that payment of the next tranche of loan aid to Greece is possible by mid-December if the new government and the two main parties give a written commitment to the bailout terms, according to Juncker, who also replied that he knew who was going to be the following Greek prime minister.

Despite Juncker's answer about the next Greek prime minister, there is still no agreement according to Reuters. The report paints the former ECB vice-president Lucas Papademos as the front runner to head the transitional government of national unity until the election 19 February 2012. However, the news agency hedges its bets by mentioning the European ombudsman Nikoforos Diamandouros and the envoy to the IMF Panagiotis Roumeliotis.

Reuters provides quotes from the document on EFSF leverage Regling mentioned.


Italy hot stuff

Juncker pointed out that Italy is not undergoing an EU rescue programme. However, Italy experienced unprecedented speculation yesterday, from at least three angles.

Media speculated wildly on (1) the possible resignation of prime minister Silvio Berlusconi and (2) Italian bond yields surged towards the 7% level. Both bonds and (3) the stock market fluctuated on the conflicting rumours, positively on resignation and negatively on denial.

In the background we have a vote of confidence in the Italian parliament today, as well as the economic reforms sketched by Berlusconi.

Prime minister Silvio Berlusconi promised a string of reforms to the European Council 26 October 2011 and the European Central Bank, as described by EurActiv, Reuters and The Guardian. The Corriere della Sera had a report, but also the full text of Berlusconi's letter (in Italian).

The finance ministers meeting in the Ecofin Council today will keenly follow the political developments in Italy and the market reactions, and want to hear about concrete plans to put the promised reforms into practice.



Ralf Grahn

Eurozone: Credible Greece?

Each of the Europan finance ministers fights a war for stability (and sustainable growth propects) on the home front, intrinsically linked with the efforts in the other EU member states, at European Union (eurozone) level and globally.

The ministers meet in the Economic and Financial Affairs Council (Ecofin) Tuesday 8 November 2011, after the meeting of the Euro Group this evening, to take stock of developments and to chart a route to safety.

Yesterday, we looked at the background and gaps and filled the Ecofin file with recent EU and eurozone declarations.

There is more drama in the air than most of the ministers, market players and ordinary people would care for. We are all anxiously following Greece.


Greece

According to Bloomberg, the main party leaders George Papandreou and Antonis Samaras have finally agreed to hold talks on a new government, a first step.

A new administration would be sworn in and a confidence vote held within a week if all went well, BBC News Europe reports, quoting a Greek government spokesman. - The cliffhanger is not over yet.

The Greek political leadership has unsettled nerves globally, and trust levels are low. Reuters Canada reports that Asian markets were falling this morning, despite the announcement on coalition talks.

In yet another enexpected move, the Greek government had terminated the contract with the three banks advising on the 50 per cent write-down of Greek public debt (euphemistically called Private Sector Involvement PSI), as reported by Market Watch.

***

From a promise of talks, the Greek population and the world expect a deal on the leader and the composition of a new government, certainty about the ratification and implementation (or not) of the rescue deal and knowledge about the early election.

The caretaker or interim government did not appear before the markets opened.

With or without bankruptcy and with hardships set to continue, the Greek people have to settle on a course of political and economic stability, as well as competitiveness for sustainable growth in the real world of the global economy.

For the time being, most of us – inside and outside - continue to be unwilling passengers on a Greek bus racing along mountain roads with competing drivers.



Ralf Grahn

Eurozone Monday: Follow-up to October EU summits

I presume that the finance ministers meeting in the Euro Group and Ecofin 7-8 November 2011 already have these additions to the Council background note in their files. Perhaps others would like to be spared the tedious search.


Follow-up to October meetings

For a deeper view on the main text of the background note (page 2) and the Annex (page 6) on the strategy employed to counter the crisis in the eurozone, you can consult the following recent Ecofin, Euro Group, European Council and eurozone summit documents:

Council confirms agreement on economic governance; Luxembourg, 4 October 2011 (14998/11; 5 pages), i.e. six-pack highlights

Communiqué by the Eurogroup on the Greek Economic Adjustment Programme; 21 October 2011 (1 page), with green light for the next tranche of aid, pending IMF approval, based on the Troika assessment under the first rescue programme for Greece; second rescue package being prepared

Extraordinary Council meeting Economic and Financial Affairs; Brussels, 22 October 2011 (15893/11; 8 pages), preparation of European Council, but conclusions devoid of substance

European Council 23 October 2011 conclusions (EUCO 52/11; 12 pages), with growth priorities including the Single Market Act, full implementation of the Services Directive, request for a roadmap for a fully integrated Digital Single Market, reduction of the administrative burden for businesses (Smart Regulation), putting into practice recommendations on budgetary policies and structural reform; energy, including energy efficiency, as well as research and innovation; y increase cofinancing rates and better targeting for EU funds; implementation of the new framework for economic governance and a strengthened role for commissioner Olli Rehn; an ambitioius second round for the European semester; stronger financial regulation at the EU and the global level; preparation of eurozone summits 23 and 26 October with Herman Van Rompuy designated president of eurozone summits, his report having been postponed to December; assertive external trade policy, based on bilateral and regional agreements with strategic partners; promoting economic ties with neighbourhood; promoting trade policy issues. The conclusions also dealt with G20 preparations, climate change and foreign policy, before a statement on the cessation of ETA's terrorist activities.

Statement of EU heads of state or government; Brussels, 26 October 2011 (3 pages), when the national leaders of all 27 EU member states were informed about the euro summit later in the day. They agreed to a text on the banking package, as part of the whole set of eurozone measures.

Euro summit statement; 26 October 2011 (15 pages), reiterated steps taken and outlined the second rescue package to Greece including haircuts of 50%, leverage for the EFSF, bank recapitalisation and funding, antional measures in addition to the six-pack, the European Semester and the Euro Plus Pact, possible Treaty changes. The eurozone summit also announced (Annex 1) ten measures to improve the governance of the euro area (many of the Franco-German proposals endorsed). Consensus on the banking package in Annex 2.



Ralf Grahn

Eurozone finance ministers Monday: background and gaps

The finance ministers of the Euro Group meet to ride the Greek rollercoaster on the slopes of the Apennines, well after markets open and close in Europe Monday, 7 November 2011.

Are we going to see solutions emerging in Greece and Italy ahead of the eurozone meeting and the full Ecofin Council on Tuesday?

The Annex to the Council background note offers a convenient one page summary of the ongoing work to alleviate the crisis in the eurozone (page 6). The overview would have been even better, had it linked to the relevant documents (although two documentary links about other items are provided in the preceding main text).

The documents of the Ecofin open sessions have not been updated (yet).

There are some gaps to fill. Observers of the European Union (eurozone) need the relevant documents, plus information about possible weekend developments in Greece and Italy.

For lively discussion about the eurozone challenges I recommend the multilingual aggregator of 873 euroblogs Bloggingportal.eu. You can read, comment and share.



Ralf Grahn

Eurozone: Playing with Greek fire in Athens

Where are we now? The FT Eurozone crisis live blog continued to offer excellent coverage 4 November 2011, including the G20 summit in Cannes. There you have a recap of the whole day until late afternoon, if you stand reading the updates upwards from the end.

For later developments in Greece we can go to Financial Times Deutschland, which presents the three protagonists of the power struggle in Athens: prime minister Giorgos (or George) Papandreu (Pasok), finance minister and rival Evangelos Venizelos (Pasok) and the main opposition leader Antonis Samaras (New Democracy)(in German).

Again a word with Greek origins comes in handy: paradox. Papandreou won the confidence vote (153-145) at midnight local time, after promising to step down, writes Financial Times Deutschland (in German). He wants to negotiate a new, broadly based government from a position of strength. Samaras calls for early elections, where Pasok could expect a thrashing, and a caretaker government to implement the €130bn eurozone rescue package in between.

In short, something has to give before Greece goes bankrupt mid-December. Not very reassuring for the eurozone governments and markets.

BBC News Europe clearly report Papandreou's stand before winning the vote of confidence. He promised power-sharing talks between parties, but ruled out snap elections as catastrophic (note Greek word origins), and he said that the bailout deal had to be accepted. Papandreou is going to inform the president of his intentions today, Saturday. Mark Lowen adds that Greeks - and all of Europe - are watching anxiously for Papandreou's next move.

The Financial Times looks toward the beginning government talks. Papandreou wants the president Carolos Papoulias to hand him a mandate to form a new government under another socialist politician, but without a rush to new elections. New Democracy rejects the plan and demands new elections within six weeks.

The Wall Street Journal Europe describes the situation, polarised between a Papandreou intent on the socialists leading a more broadly based (interim) government and the conservative leader Samaras finding his proposals rejected by the Pasok leader. The eurozone leaders are deeply worried about the fallout from a possible Greek default.

***

Is it possible to form a new and government during the weekend (without New Democracy?), before the markets open and EU finance ministers meet Monday? What would be the usefulness of a minor adjustment, except offering Papandreou an 'honourable' exit?

They seem to be playing with Greek fire in Athens.



Ralf Grahn

Eurozone: Athens, Byzantium and Rome

We continue our exploration of euroblogs through the multilingual aggregator Bloggingportal.eu in our quest for views on the crisis in the eurozone. We visit the capitals - Athens, Byzantium and Rome – cradles of European civilisation.


Athens

Gulf Stream Blues asked: Was it all for nought? Maybe Papandreou hoped that if the Greek people themselves are forced to make the same choice he is now faced with, they too will conclude there is really no other option for the country.

Europaportalen.se noted that the Greek referendum is off the table, but Papandreou has not resigned. There are signs of some sort of cross-party solutions taking shape (in Swedish).


Byzantine politics?

According to the bilingual EUropeanista blog a referendum in Greece, at first sight a perfectly and healthy democratic act, hides treason. Greece is being betrayed, one more time, by a corrupted and incompetent political class.

Since prime minister George Papandreou has lost the confidence of his party and parts of his government, Vassilis Monastiriotis sees basically two options. One is a new party leader, Evangelos Venizelos being the only serious candidate. More probable solution is cross-party agreement on a transitory unity government to ratify the 26-27 October 2011 euro(zone) summit agreement ahead of an early election. Papandreou and the referendum seem to be goners, but the problems of instability and lack of legitimacy set to remain for Greece.


Roma aeterna?

The Open Europe blog notes the defection of two of PM Silvio Berlusconi's MPs to the Christian Democrats. The government meeting on new emergency measures and the arguments with finance minister Giulio Tremonti further weakened Berlusconi's leadership, as did a letter by six of his MPs calling for his resignation. The speaker of the lower house, Gianfranco Fini, publicly criticised the prime minister. The interest rates on Italian state bonds are worryingly high.

Papandreou is obviously finished, writes Georgi Gotev, but a failing Italy would trigger a tsunami effect. He wants Berlusconi to quit and Mario Monti in the role of Pulcinella.


Vadum Francorum

Arthur Goldhammer noted that the European Central Bank dropped its leading rate by 0.25%. So did Patrice Cardot.


Citius, Altius, Fortius

Many leaders acts as if the world hadn't changed in twenty years, opined Gunnar Hökmark MEP (in Swedish). Papandreou has wilfully undermined the confidence in him and his government. Italy is in dire need of strucural reforms. The EU more broadly has for a long time needed competitiveness, but little has been achieved. In the United States two parties prevent needed fiscal policies.


G20

Arnaud Leparmentier picked some interesting quotes from the G20 leaders.


Habent sua fata libelli

The viewpoints are different, but they all represent a part of the European public sphere, for the enlightenment of readers. Earlier roundups in the eurozone series concern possible exitus letalis, more Greek dra(ch)ma, vanishing marble(s), the need for democratic and robust government at European level, as well as calls to and from Athens.



Ralf Grahn

Eurozone: Calling Athens...

We continue to explore the euroblogs through the multilingual aggregator Bloggingportal.eu. After possible exitus letalis, more Greek dra(ch)ma, evaporating marble(s) and the need for democratic and robust government at European level, we turn to new entries about the crisis in the eurozone.


Losing appeal?

Is the European Financial Stability Facility (EFSF) worth its triple-A rating, asks Gli Euros (in Italian).


USA in G20

Pierre Buhler on Telos greeted the G20 leaders to Cannes by reminding us of the partisan warfare concerning the federal deficit and debt in the USA, as well as the underlying lack of competitiveness in the real economy. The indebted US projects less power globally (in French).


Calling Athens...

The Open Europe blog wondered who is actually running Greece, given the conflicting signals, which the blog followed at different times during the day.

Few options for Europe on the Greek vote, says Don Melvin, since the mere existence of the referendum on the horizon will keep uncertainty high in the markets.

Martin Nangle writes that Greece must not be coerced into a resentful position to save Brussels pride. Brussels should acknowledge that the mood of citizens is fast shifting towards direct action, social unrest and possibly revolution.

According to Hara Kouki and Antonis Vradis the Greek people are left with absolutely nothing to hope for from the mainstream political scene. After exemplifying growing misery, the authors highlight grassroots refusal to put up with austerity, which is quickly gaining momentum. In other words, civil disobedience on the rise.

Papandreou seems to have at least the Spanish socialist Carlos Carnero in his corner, with a link to the letter of the Greek PM presented in Publico.es (both in Spanish).


Greece and eurosphere

Erkan's Field Diary dedicates one of his judicious roundup posts to the deepening Greek crisis and the broader eurosphere.



Ralf Grahn

Eurozone: Greek invention beckons

After possible exitus letalis, more Greek dra(ch)ma and evaporating marble(s), we return to the multilingual euroblog aggregator Bloggingportal.eu for further discussion among virtual friends and unknowns about the crisis in the eurozone.


Democratic foundation

An economic and monetary union (EMU) based on democracy would not have caused a shock such as the Greek announcement, says Eva en Europa. We need to move from summits to politically legitimate decisions on revenue and expenditure at European level (in Spanish).

I agree, democratic and robust at the European level, if we want to prosper.


Papandreou quitting?

Papandreou may be forced to quit, says Europaportalen.se, and the referendum is on its way out (in Swedish).

The confidence vote takes place in the Greek parliament tonight, but a new phase seems to be in store.


Straight talk on democracy

Papandreou has the laudable reflex to put the question back to the people, but he is wrong, writes Stefan Collignon. The will of the Greek people cannot bind the rest of Europe's citizens. Nation state democracy is incompatible with democracy at the European level. What is needed is democracy by, for and through all of Europe’s citizens. Europe’s common public goods belong to all Europeans. Citizens are the sovereign, not states, and they have a common interest in controlling their government.

This is the kind of talk about democracy we should be hearing from our political leaders, not the agonising about how little national sovereignty to pool and with how minimal democratic concessions to EU citizens.


Hellenic inheritance

What are the Greeks up to, wondered Europabloggen.no. Democracy may be a Greek invention, but so is drama, but they have no right to plunge 500 million Europeans into chaos (another Greek word). Papandreou announced the referendum in order to save his own hide, without consulting his partners who have expended political capital to help. - On the side, Europabloggen.no presents the idea that the European Economic Area (EEA) could be a solution for Turkey, which is experiencing difficulties in its negotiations for full EU membership (in Norwegian).

Especially here in Ultima Thule, we are indebted to those who laid the foundations of European civilisation in classical antiquity, so the Norwegian blog conveniently draws our attention to our cultural heritage.

However, Athens and Rome need to move with the times in terms of good government and competitiveness.


Trust capital

Trust is the most valuable asset between European partners. Whatever the conspiration theorists say. Thomas Mayer argues that Papandreou has lost face and must go. He agreed to the rescue package without evoking a referendum, then turned his coat and blew his credibility (in German).

Right, raising new hurdles after the summit agreement was a deal breaker.


Strings attached

Where a sovereign state has lost the ability to service its debt and requires outside help, it always comes with strings attached. Susan Fuchs wonders if a Greek referendum is helpful, and presents arguments both pro and contra.

When 17 or 27 governments need to agree unanimously, the risk of suboptimal outcomes and horse-trading increase exponentially in comparison with effective and democratic structures, but a surprise announcement of a referendum to keep Pasok in power went over the top.


European public sphere

Gerry Feehily looks at European press reactions to PM Papandreou's referendum and the euro crisis.

Few questions (outside soccer) have ignited pan-European discussions as much as the latest twists and turns in the eurozone crisis.

***

Our greatest thank you note to the Greeks is to turn their invention – democracy – into a living reality at European level.



Ralf Grahn

Eurozone: Lost marble(s) or Athenian genius?

As Jean-Claude Juncker said, others can help Greece only if the Greeks help themselves.

To every thing there is a season, and a time to every purpose under the heaven, so the rest of the world cannot keep riding the Greek rollercoaster forever.

How have matters developed after my post on the risks of EU or eurozone exit and chaotic default for Greece, as well as before my latest entry on the continuing dra(ch)ma, which has made us more Europeans than ever?

See:

rszbt Beate Reszat 
Amazing: Greece makes us become Europeans: MT @RalfGrahn: Grahnlaw: More Greek Dra(ch)ma bit.ly/rAmTTD #eurocrisis #gfc2 #EU #G20

Here are a few updates from the European public sphere, as reflected on multilingual Bloggingportal.eu, the euroblog aggregator.


Federal policies

George Irvin wants a future federal euro area to govern policies on wages and productivity, given the problem of trade imbalances.


Lost marble(s) or stroke of genius?

Has the Greek prime minister George Papandreou fully lost it, wonders Megan Greene. Will his political ploy materialise? If it does, the outcome is unclear. Anyway, a default cannot be avoided indefinitely, but a disorderly default poses a risk to the eurozone.

Is George Papandreou a political genius, asks Erik Dale, and argues that he is. He made the IMF and the EU pose an ultimatum to the Greek people, instead of doing it himself. Just in time for the next batch of money.


Greece and China

Greece and China are on Gunnar Hökmark's mind (in Swedish). Greece is full of unanswered questions. China and other surplus economies need to offer their citizens more spending power.


Deus ex machina?

Francesco Guarascio sees many challenges for Mario Draghi, but with European Financial Stability Facility (EFSF) leverage deal hanging in the balance, the European Central Bank might again find itself to be the only shield available to prevent a complete meltdown.


Freedom's just another word for nothing left to lose

Merkel is giving the Greeks a free choice on staying or leaving the eurozone, writes Europaportalen.se (in Swedish).

Whether mere political operator or democracy’s champion, Papandreou will by hook or crook give the people a voice, hopes A curious Yankee in Europe's court.

In a rare appearance of a euroblog in Portuguese, Restolhando/Rustling ponders a Greek popolution asked to choose between two ways to die.

***

My take: What EU citizens lack are the democratic and robust institutions at European (eurozone) level, where the issues are. Only democracy and sufficient powers can end the tortuous and torturous road of failed attempts and half-measures, including such as the Papandreou ploy.



Ralf Grahn

More Greek Dra(ch)ma

Forget about Alice in Wonderland when prime minister George Papandreou, starring the Greek Dra(ch)ma of domestic politics, overshadows the sideshow of the G20 leaders in Cannes. Markets around the world have barely stopped shaking.

The referendum surprise rabbit was stuffed back into the hat as quickly as it had been conjured up, but incredibly the magician Papandreou is still in office, intent on winning a vote of confidence tonight.

You can relive the surreal day of 3 November 2011 through the live blog of Athens News, the FT Eurozone crisis live blog, the CNBC summary of the day, the Reuters summary, the Spiegel Online International report, the Financial Times Deutschland summary (in German), just to name a few.

This morning again, the euro drama is spread on millions of breakfast tables (in paper or virtual form) and played out on millions of screens.

Few have ignited as much pan-European debate as George Papandreou. The euroblogger Ronny Patz - @ronpatz on Twitter – tweeted it like this:

After these weeks, nobody should complain anymore that there is no European Public Sphere. Everyone talks #eurozone & #greece.

What EU citizens lack are the democratic and robust institutions at European (eurozone) level, where the issues are. Only democracy and sufficient powers can end the tortuous and torturous road of failed attempts and half-measures.

In the meantime, tune in to the next episode.



Ralf Grahn

EU or eurozone exit and chaotic default for Greece?

Few have ignited as much pan-European debate as George Papandreou, who remains prime minister of Greece at least until Friday evening. Not only mainstream media are full of reports, but multilingual Bloggingportal.eu is teeming with contributions from eurobloggers. Here are a few euroblog posts.

Lost in EUrope wanted to see the Greek referendum announcment as an opportunity to establish rules for orderly secession from the eurozone and for a European Monetary Fund (in German).

Eurosearch noted that after years of talking about how to make the EU more democratic and countless pages written to explain the democratic deficit, it boils down to the crucial possibility to choose between governments (‘throwing the bastards out’) and policies which is still, at the EU level, not present.

Karpfenteich opposes buying of state bonds by the European Central Bank (in German).

Popular protests against austerity measures were reported on Global Voices.

What happens next? Kevin Featherstone outlined scenarios from early elections to the alternative outcomes of a referendum.

Gunnar Hökmark MEP described Greece as increasingly ungovernable and beyond help (in Swedish). Without outside help there is little stagnant and uncompetitive Greece can finance on its own.

Le Taurillon interviewed the economist Le Héron, who described Greece as a weak and corrupt state, but its uncompetitive economy would gain little from secession. The bailout funds are still not sufficient in case of contagion. At the European level better economic coordination, a substantial budget and a wider ECB mandate are needed (in French).

Europaportalen.se reported Papandreou's surprise announcement as a risk to the G20 summit plans and the eurozone rescue effort. EU leaders in Cannes would give the Greek PM a hot reception (in Swedish).

The blog of the ECFR in Madrid reported that China would not rescue the eurozone through the EFSF or the ESM in the current turmoil, anyway not without being recognised as a free market economy in the WTO. Participation by the BRICS through new funds for the IMF is possible, but they want more voice (in Spanish).

According to Renaud Dehousse on Telos the Greek referendum announcement showed shocking irresponsibility. The structural weaknesses of leaders with national mandates and unanimous decision making must be replaced by majority voting and institutions equipped to act in the general interest (in French).

Clem Chambers wondered if a Greek tradegy is in store, after all. News that a Greek referendum could see that country choose to default on debt, despite the best efforts of Euro leaders to save it, sent markets into fresh free fall come the morning of 1 November.

The European Citizen saw Papandreou's decision as a massive political gamble. A yes would mean buying into the process so far and imply support for however it evolves. A no would mean the end to the loans, complete default (along with the instant austerity that the inability to fund the deficit implies) and probable exit of the Eurozone.

Honor Mahony brought the suffering of the Greek people to the fore, as an explanation for giving them a say.

Maxime Larive saw Papandreou's referendum announcement as a very rational move from a politician trying to save his career by avoiding a personal failure and a probable demonization by Greek fellows. Referring to a post by Ronny Patz, Larive concluded that the European citizens are the missing element for a successful Union. Ultimately, the EU and the euro will survive and be successful if Europeans decide its future and shape.

Marco Zatterin reported that without a firm undertaking, it is impossible for the IMF to pay the sixth tranche of the ongoing Greek rescue, amounting to €8bn. In mid December the state coffers of Greece will be empty (in Italian).

Álvaro Millán wrote that the Greeks have every right to decide about their future, but their decision affects all Europeans, turning Papandreou's proposal into a nightmare for us all (in Spanish).

Yanis Varoufakis reckoned that the referendum is a shoddy, strategically ill-fated, morally corrupt and politically damaging ploy. Papandreou has done enough harm to the Greek nation and Europe. He should resign.

Kati Suominen writes that the G20 summit in Cannes is going to be hijacked by Europe's troubles, but she paints a broader canvas of the international challenges.

The Financial Times live blog on the eurozone crisis ended at midnight local time after reporting from Cannes, Rome and Athens that the €8bn tranche of IMF and eurozone aid is suspended until the world knows if Greece wants to abide by the summit deal. The FT promised to continue coverage in the morning.

The eurozone shows Greece the door to exit, reports Jean Quatremer, who states that the leaders refuse to be taken hostage by Greek internal politics. Papandreou can freely consult his people, but it is for him to draw the conclusions. The referendum could now take place 4 December 2011, but Quatremer doubts if Papandreou will survive the vote of confidence on Friday.

***

If prime minister George Papandreou wanted to blackmail the eurozone leaders and international lenders, he has failed. There is no way they can extract more sacrifices from European taxpayers or others to keep him in power.

The Greek parliament holds the keys to the fate of the Pasok government and the possible referendum.

Referendum or elections, the Greek people face stark choices.

One is chaotic default and exit from the European Union or a new procedure to leave the eurozone separately.

The second is prolonged misery according to the agreed bailout regimes and later additions.

Either way, Greece still needs to become a functioning state and competitive economy.

Left on the table are the other euro area dominos needing to be sorted out, but not much time...

Without robust and democratic institutions at European or eurozone level there is, however, no end in sight to the interminable row of failed attempts and partial fixes.



Ralf Grahn

End of eurozone or beginning of democracy?

Our knowledgeable guides take us on a tour of the hospice of the eurozone.


Europe-27etc

There is not a minute to spare, if we want to avoid a disaster worse than the Lehman collapse, says Europe-27etc: Madame la Chancelière, Monsieur le Président, n'ayez pas peur !

Chancellor Merkel, president Sarkozy and the rest of the leaders need to give the common euro currency the common government it needs:

C’est donc une question de gouvernement : parce qu’elle a une monnaie unique, la zone euro doit se donner un gouvernement fédéral.

Credibility requires a real representative democracy at federal level:

Seule l’alternance dans un cadre constitutionnel fédéral peut guérir nos maux, rendre à la démocratie représentative ses lettres de noblesse, offrir aux Européens, dans l’unité, le choix entre des politiques immobilistes et des politiques innovatrices, efficaces et donc crédibles aux yeux du monde entier.

Liana Giorgi

Running around like Headless Chickens, is the blog post where Liana Giorgi describes the German enterprise minister Philipp Rösler's (FDP) anti-European, anti-democratic and anti-federalism op-ed as unintelligent and populist. Something different is needed:

Coming up and diffusing negative sound bites is easier than relying upon and diffusing expert knowledge—but this is no excuse for giving into the former temptation.

FT nightmare scenario

The Financial Times earnestly discusses the nightmare scenario for the eurozone.


Business Insider and VoA on Greece

Something went wrong. After Geithner Strikes Out In Poland, Papandreou Cancels U.S. Trip And Hurries To Greece, says Business Insider.

At least this remains suspended. Voice of America tells us that EU Finance Ministers Delay Aid Decision.


Summing up

This how the Voice of America summed up two days of ministerial meetings in Wroclaw, Poland: EU Finance Ministers Fail to Agree on New Debt Measures.

The British chancellor George Osborne offered some advice from the outside of the eurozone:

I think everyone here understands the severity of the situation... People know that time is running out. The eurozone needs to know it needs a grip on the situation.

Ralf Grahn

Eurozone: Friendly fire or collateral damage?

We continue monitoring the new era of European disintegration, especially in what is still known as a eurozone of 332 million inhabitants in 17 countries.

Yesterday, chancellor Angela Merkel noted how closely the break down of the euro was related to the fate of the whole European project:

Scheitert der Euro, steht das europäische Projekt insgesamt auf dem Spiel.

(Merkel's full ”Stabilitätsunion” speech in Magdeburg.)

The Financial Times tells us that the German Bundesbank opposes ECB bond buying (22 August), still. Spiegel Online International reports that president Christian Wulff has joined the prominent opponents in Germany: German President Questions Legality of ECB Bond Purchases (24 August 2011).

For good measure, the German Bundesbank criticised the decisions of the 21 July 2011 eurozone summit on the second Greek bail-out and the added flexibility of the EFSF, as well.

In the context of the second bail-out of Greece, in the blog post Eurozone issues collateral and honesty (24 August), we saw the eurozone summit statement and the following deal on collateral between Finland and Greece. The eurozone partners did not warm to footing the bill, but for the government of Finland it remained a question of how, not if, collateral will be given.

Peter Spiegel on the FT Brussels blog continued by asking [UPDATED] Will Finland sink the Greek bail-out? (24 August). Markets and market watchers were becoming jittery.

The Open Europe blog looked at positions taken by leading politicians, country by country: Collateral Thinking (24 August 2011).

(By the way, the populist True Finns (Perussuomalaiset) have just decided to call themselves The Finns in English.)

Ruth Berschens in Handelsblatt tells us today that the collateral for Finland is off the table. The headline sounds conclusive: Sicherheitspfand für Finnland ist vom Tisch (25 August). However, the euro area governments seem to be discussing real estate as collateral.

If they reach no positive outcome, the Greek bail-out may unravel, and with it the eurozone as we know it.

We could then be left wondering if the eurozone broke up and the EU declined through friendly fire or as collateral damage.

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The new articles on 841 euroblogs are just one click away. Follow and participate in the discussion about the eurozone and other European issues on multilingual Bloggingportal.eu, an important part of the European public space.



Ralf Grahn

Eurozone issues collateral and honesty

The Finnish government has (admittedly, because of domestic political weakness) consistently demanded collateral for the second bail-out of Greece. This precondition was, somewhat obscurely, recognised by the eurozone summit 21 July 2011.


Protesilaos Stavrou

The euroblogger Protesilaos Stavrou has written an interesting piece on the effect of the demands for collateral as a precondition for approval of the second bail-out of Greece: Demands for collaterals show lack of a collective spirit (24 August 2011).

Finland set the snowball rolling, so I wrote two blog posts about the root causes and the events in Finnish: Suomi näyttää: Euroalue on korttitalo (23 August) and Suomen Kreikka-vakuudet vastatuulessa: Mistä tämä kertoo? (24 August 2011). (Why not try machine translation?)


Eurozone summit

The government of Finland has, admittedly as a result of domestic electoral politics, set collateral as a precondition for participating in the second bail-out package for Greece.

Although preparation for and discussions in Euro Group and Council meetings remain murky for outsiders, these aspirations have been aired publicly long and often enough. They come as no surprise for the euro area partners.

The eurozone summit acknowledged this demand, although the language is less than crystal clear. See: Statement by the heads of state or government of the euro area and EU institutions; 21 July 2011; point 9:

9. Where appropriate, a collateral arrangement will be put in place so as to cover the risk arising to euro area Member States from their guarantees to the EFSF.

This agreement in principle was the basis for the deal between the Finnish and the Greek government, which the Ministry of Finance in Finland informed about in a 16 August 2011 press release (Finnish only).

The snowball effect and fears that the Greek rescue package could be delayed or even unravel, have suddenly led to a 'Nein' from Merkel and the need for new discussions to open the Gordian knot. For the government of Finland it is still a question of how, not if, collateral will be given.


Comment

Now, we should have the facts straight, in order to follow the next steps.

A few additional points.

I have little sympathy for populists who are keen to wreak havoc in the eurozone and consequently in the wider European and world economy, although I am far from certain that the structures of the eurozone are democratic and robust enough to succeed, or that the national political leaders are up to the challenges.

I understand that many people in the Mediterranean countries feel unkindly treated by less than generous remarks about their political system and national character.

However, the citizens and politicians in these countries need to take a deep and honest look in the mirror.

To put it crudely, can we expect European solidarity if citizens domestically cheat on each other through corruption or tax evasion?

Even if the lack of democracy and effectiveness at eurozone level are root causes of the euro area crisis, I would appreciate more reform-minded thinking from citizens in the weak eurozone countries, on how to enhance competitiveness, improve internal solidarity with regard to clientelism, tax-paying, corruption, governance, sustainable public finances etc. in order to embrace a brighter future in a globalising world and in Europe.

Honesty.

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Follow and participate in the discussion about the eurozone and other European issues on multilingual Bloggingportal.eu, an important part of the European public space, with the new articles on 841 euroblogs just one click away.



Ralf Grahn

Which straitjacket and life jacket for Eurozone Greece?

Yesterday, I collected a few of my blog posts regarding the eurozone crisis and the issue of transparency on Grahnlaw Suomi Finland. The text is in Swedish, but most of the posts and some references are in English: EU-institutionerna mellan stumhet, PR och genuin öppenhet (Portugal och Grekland). (For the rest, you can try Google translation.)

While I am worried that the lack of quality information from the EU institutions is like a gift to demagogues and populists in the weak eurozone countries as well as in the stronger ones, the president of the European Council had taken a different tack the previous day. According to EurActiv, Herman Van Rompuy maintained that the messages given out are part of the problem, not a part of the solution: Special report: Van Rompuy warns leaders not to panic markets (20 May 2011).

As we have noted, credible and up-to-date information from the EU institutions about Greece is especially scarce. Not a word in the Ecofin conclusions on Tuesday.

Regardless of conflicting messages and Van Rompuy's admonishing words the markets follow their own instincts and reasoning.


Greece downgraded

On the Brussels blog (Financial Times), Joshua Chaffin notes that the credit rating agency Fitch Friday downgraded Greece's long term debt by one notch to B+, with a negative outlook. ”Soft” or not, the rating agency takes a dim view of any debt restructuring: Fitch joins chorus for another Greece bailout (20 May 2011).

However, Reuters speaks about a cut by three notches, but records the same B+: Fitch cuts Greek rating, warns over restructuring (20 May 2011).

According to Wikipedia, Fitch's credit rating B+ is in the category Non-investment grade, highly speculative. Three notches below the March rating BB+, Greece is now in the company of Zambia.

Le Monde makes the three-notch drop explicit, by mentioning both the previous BB+ and the new B+ grade: L'agence Fitch dégrade de trois crans la note de la Grèce (20 May 2011).

Bloomberg tells us that the yield on the Greek 10-year bonds rose to 16.6 percent: Fitch Cuts Greece to B+, Says Maturity Extension Is Default (20 May 2011). It is even clearer than before that Greece is outside commercial debt financing of its huge government deficits.

The next moves have to come from the government and society of Greece, followed by the conclusions of the EU-IMF mission, but we still have to wait for guarantees that the EU, including the ECB and the member states, will deliver a combination straitjacket and life jacket able to avoid financial meltdown.



Ralf Grahn

Eurozone rescuing Greece: Conditionality is a big stick

Solidarity towards Greece and eurozone self-interest both motivated the efforts to get the team back into the play. The stakes were unprecedented on both sides, and they still are.

The euro area countries and notably the International Monetary Fund (IMF) did not sign blank cheques, but agreed to give highly conditional support. As the EU Council explained:

The very severe deterioration of the financial situation of the Greek Government has led euro area Member States to decide to provide stability support to Greece, with a view to safeguarding the financial stability of the euro area as a whole, in conjunction with multilateral assistance provided by the International Monetary Fund. Support provided by the euro area Member States will take the form of a pooling of bilateral loans, coordinated by the Commission. The lenders have decided that their support shall be conditional on Greece respecting this Decision. In particular, Greece is expected to carry out the measures specified in this Decision in accordance with the calendar set out herein.

I suggest that you read for yourself the Council Decision on fiscal surveillance and deficit reduction in Greece was published today in the Official Journal of the European Union (OJEU):



COUNCIL DECISION of 10 May 2010 addressed to Greece with a view to reinforcing and deepening fiscal surveillance and giving notice to Greece to take measures for the deficit reduction judged necessary to remedy the situation of excessive deficit; OJEU 11.6.2010 L 145/6.



Conditionality expressis verbis


The four substantive Articles of the Council Decision spell out the narrow path the Greek government has to take to put an end to the excessive deficit situation.

It details the measures Greece has to take, as well as the deadlines, in express terms.

As I said, I suggest that you read the detailed Decision.

I am just going to offer you a few disjointed extracts to give you an inkling of the tenor:

Greece shall put an end to the present excessive deficit situation as rapidly as possible and, at the latest, by the deadline of 2014.

The adjustment path towards the correction of the excessive deficit shall aim to achieve a general government deficit not exceeding EUR ...

Greece shall adopt the following measures before the end of June 2010: ...

Greece shall adopt the following measures by the end of September 2010:

Greece shall adopt the following measures by the end of December 2010: …

Greece shall adopt the following measures by the end of March 2011: ...

Greece shall adopt the following measures by the end of June 2011: …

Greece shall adopt the following measures by the end of September 2011: ...

Greece shall adopt the following measures by the end of December 2011: …

Greece shall fully cooperate with the Commission and transmit without delay, upon a reasoned request from the latter, any data or document required in order to monitor compliance with this Decision.

Greece shall submit to the Council and the Commission a report outlining the policy measures taken to comply with this Decision on a quarterly basis.

Sovereignty?


The Greek government and the parliament have voluntarily undertaken their part of the rescue bargain, but it is a daunting challenge.

What is left of ‘sovereignty’, when a country has lost its capacity to cope on its own?

Conditionality is a big stick.




Ralf Grahn

Eurozone team rescue Greece: Legal base

Today the Council Decision on fiscal surveillance and deficit reduction in Greece was published in the Official Journal of the European Union (OJEU):



COUNCIL DECISION of 10 May 2010 addressed to Greece with a view to reinforcing and deepening fiscal surveillance and giving notice to Greece to take measures for the deficit reduction judged necessary to remedy the situation of excessive deficit; OJEU 11.6.2010 L 145/6.



Legal base

The decision is based on Article 126(9) of the Treaty on the Functioning of the European Union (TFEU)(in the latest updated version of the treaties, OJEU 30.3.2010 C 83/101):

Article 126(9) TFEU

9. If a Member State persists in failing to put into practice the recommendations of the Council, the Council may decide to give notice to the Member State to take, within a specified time limit, measures for the deficit reduction which is judged necessary by the Council in order to remedy the situation.

In such a case, the Council may request the Member State concerned to submit reports in accordance with a specific timetable in order to examine the adjustment efforts of that Member State.

The decision is also based on Article 136 TFEU concerning measures specific to those member states whose currency is the euro. The Council Decision states:

Article 136(1)(a) TFEU foresees the possibility of adopting measures specific to the Member States whose currency is the euro with a view to strengthening the coordination and surveillance of their budgetary discipline.

Reasons

The Council presents the history of the excessive deficit procedure (EDP) concerning Greece. It then states that the economic situation has worsened:

However, the abrupt change in the economic scenario means that those plans can no longer be considered valid, requiring even more drastic action in the course of the current year. At the same time, the depth of the contraction in the economy that can now be expected makes the achievement of the initial deficit reduction path unfeasible. Unexpected adverse economic events with major unfavourable consequences for government finances can be considered to have occurred in Greece and revised recommendations pursuant to Article 136 and Article 126(9) TFEU are therefore justified.

Beggars are not choosers

The government deficit of 13.6 % of GDP in 2009 and the debt level of 115.1 % (both subject to potential moves upward after statistical investigations) can be described with one word: catastrophic.


Since the FIFI World Cup kicks off today, we could use a football parable:

If one of our players commits a serious individual mistake in front of our goal, and the other team scores, our team is down by one goal (and on its way to lose the match).

The euro area is a team. The eurozone expects every team member to do its duty.




Ralf Grahn

Deficit reduction in Greece: Official publication

There is a striking difference between financial markets and news reporting operating globally around the clock on the one hand, and the complex task of officially publishing information about the European Union in all the languages on the other hand.

One month ago the EU Council made a decision on fiscal surveillance and deficit reduction in Greece. Today the Council Decision has been published in the Official Journal of the European Union (OJEU):



COUNCIL DECISION of 10 May 2010 addressed to Greece with a view to reinforcing and deepening fiscal surveillance and giving notice to Greece to take measures for the deficit reduction judged necessary to remedy the situation of excessive deficit; OJEU 11.6.2010 L 145/6.


Timely information

Even if OJEU publication is slow, there are quicker ways to access information.



The European Commission’s D-G Economic and Financial Affairs offers country-specific web pages on excessive deficit procedures (under the general headline of the Stability and Growth Pact). We find a chronological listing of EDP actions concerning Greece, including the latest Council Decision of 10 May 2010.

The Council pages I checked were less easy to navigate and not as up to date.




Ralf Grahn