This WEEK in the European Union
By Honor Mahony
Greece will dominate the headlines once more this week as it seeks to meet three conditions by Wednesday (15 February) in order to secure a second €130 billion bail-out.
The mood of the week will be shaped by whether the Greek parliament on Sunday approves the terms of the package, broadly agreed by Greek party leaders.
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Greek politicians, who have sparred their way through one deadline to the next over the past weeks, will then have to come up with ideas to bridge a fiscal gap of €325 million to meet budgetary targets for this year as well as commit to keeping to the policy programme no matter who is elected into office in the next general election, expected in April.
All these pieces have to be in place by the time euro finance ministers meet in Brussels on Wednesday evening, with just over a month to go before Athens is due a major bond redemption. Without the new bail-out programme, Greece will not be able to make the repayment commitments and will default.
The European Commission will next week issue its first ever report on macro-economic imbalances in the EU, a new task and power accorded to it under strengthened budgetary surveillance rules that came into force in December.
The report will look at where the greatest imbalances are in the EU, with the new laws giving the commission the power to require countries to undertake corrective or preventative measures. The study, due Tuesday, is set to be politically controversial with some economists saying that Germany, with its large current account surplus, needs to do more to ensure liquidity in the European market.
The European Commission will take on a second controversial issue later in the week when it publishes an ideas paper on pensions in Europe.
Pensions remain a national power, and member states are keen to keep it that way, but the commission has begun to tell capitals what kind of reforms they ought to be undertaking in order to boost economic growth and productivity. The problem has become acute in recent years as the elderly dip into pensions for longer, while the funds themselves are paid into by fewer workers.
The European Parliament, in Strasbourg for its monthly plenary session, will on Wednesday host a debate with Italian Prime Minister Mario Monti. The technocrat Monti - well known in Brussels for his stints as a European Commissioner - has brought back seriousness to Italian politics following turbulent years under Silvio Berlsuconi. He has also secured Rome a seat at the EU's top table with Germany and France.
Meanwhile, the rest of Europe hopes he can restore market confidence in Italy to stop it going the way of other bailed out euro countries, with far greater consequences for the eurozone.