Monday

25th Jul 2016

Agenda

This WEEK in the European Union

  • Greece: a euro exit could prompt ratings agencies to downgrade all eurozone countries (Photo: danoots)

Eurozone finance ministers will gather in Brussels on Monday (14 May) amid heightened speculation about Greece's future in the single currency.

The minimum-needed aid was recently transferred to the indebted country as Greek politicians struggled to form a government after the 6 May election. EU politicians are pressing Greece to stick to the tough conditions attached to its two bail-outs. But around two-thirds of the population voted for anti-austerity parties.

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The other country set to be discussed is Spain. Forecasts released Friday by the European Commission showed that Spain would be in recession in 2012 and 2013. Much greater savings will be needed if it is to reach its deficit-cutting targets, but these increase the chances of a deficit spiral.

The big question is whether Brussels will allow Madrid to relax its fiscal targets. This is a political as well as economic question as Brussels seeks to maintain the credibility of its beefed-up budgetary surveillance rules.

All 27 finance ministers will meet the following day when they are set to revisit discussions on a new law on setting minimum capital for banks - the trigger for an ill-tempered debate with the UK at the ministers' last meeting. They are also expected to discuss a report prepared by the Danish EU presidency on the economic impact of Europe's ageing population.

Meanwhile finance ministers will meet Werner Hoyer, head of the European Investment Bank, with political consensus forming on the idea that the institution should get more money so it can support more growth projects.

Members of the parliament's economic and monetary affairs committee are Monday due to vote on two draft laws on further tightening Brussels' budgetary surveillance powers. The new laws would require that all national budgets are presented to the commission by mid autumn and would give the commission the power to ask for changes.

Foreign ministers will on Monday in Brussels tackle three of the biggest problems in the EU neighbourhood: the Middle East peace process; the civil war in Syria; and Afghanistan.

The Middle East discussion is set to cover Israeli demolitions of Palestinian homes on occupied land, a long-term trend making the EU-favoured two-state solution ever less viable. Ministers will add another handful of Syrian notables and companies to their blacklist in view of violations of the UN-brokered ceasefire.

The Afghanistan talks come ahead of a Nato summit in Chicago on 20 May, with EU states seeking to co-ordinate ideas on state-building efforts after International Security Assistance Force (Isaf) pull out from 2014 onward.

Ministers will also hold informal talks on Russia and Ukraine. The EU's political boycott of Ukraine over its crackdown on opposition leaders has

raised fears in Poland that Ukraine might abandon its EU integration plan in favour of closer ties with Russia.

Meanwhile, Francois Hollande will be sworn in as president of France on 15 May, paving the way to keenly anticipated meeting with centre-right German Chancellor Angela Merkel the following day.

Key to their meeting will be how much each side will give in the "growth" discussion. Hollande made reorientation towards economic growth the backbone of his election campaign. Merkel, conscious of her own electorate, has refused to consider growth underpinned by debt-enhancing spending.

On Tuesday, the focus in Brussels is set to briefly divert away from economic and monetary affairs issues to relations with its eastern neighbours.

The European Commission is set to release assessments on how 12 of them are implementing EU norms and rules - with ingredients and expectations varied according to the country.

But the news is scarcely brighter on this front. The European Neighbourhood policy is suffering from lack of political will on both sides, exacerbated in the EU's case by its current economic problems.

Investigation

ECB in ‘bail-out’ of scandal-tainted VW

The ECB has started to “bail out” Germany’s Volkswagen Group by buying its corporate bonds, but other EU-linked banks continue to shun the scandal-tainted firm.

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