€uroZone Summit boosts Stability tools, adds R&D in Competitivity Pact, supports Greece

*Brussels/Angelo Marcopolo/- The 2nd in History €uroZone Heads of State/Government Summit, held tonight (March 11)  in Brussels at a key-period on the way out of the Global Crisis, (as the 1st such €uroZone Summit having been held on October 2008, in order to face the beginning of the Global Crisis : See "EuroFora"s NewsReport from Elysée Palace in Paris), strengthened the "17" €uroCurrency Countries' Stability Instruments, (soon to be 18, while even Denmark reportedly prepares to re-consider its formely critical stance), adopted an Economic Coordination "Pact" for Competitivity and Convergence,  and supported Greece earlier than expected, while declaring Ready to do alike also vis a vis Ireland if conditions are met, f.ex. in the next, March 24-25 Summit.   

 ----------------------------  

 + "Research and Development", "Innovation", and "Education Systems", were included, as "EuroFora" had anounced earlier, (See f.ex. 12/2010 and 2/2011, from Freiburg and Brussels, respectively), among the Measures which are part of the "€uro Pact", since they "increase Productivity", together with the "Opening of sheltered sectors",  the "Business Environment, particularly for SMEs", f.ex. "by removing Red Tape and improving Regulatory Framework" etc.,   as well as "Wages", "Labour Market", "Tax reforms", "Pensions, Health Care and Social Benefits", "Fiscal rules", "Financial Stability", (f.ex. via  "Bank Stress-tests", "Level of Private Debt monitoring", etc).

    - "Essential to help the EU Grow Faster and more sustainably", this "€uro Pact", open to voluntary participation also of non-euro area EU Countries,  will "strengthen EU's Economic Governance", while its "Implementation" and "Progress towards .. Objectives" will be "Monitored politically by the Heads of State/Government of €uroArea and (other) Participating Countries on a Yearly basis", March 11 Summits' Conclusions anounce, establishing, thus, the New principle of at least 1 €uroZone's Summit each Year.

 

 On EU's Financial "Stability" Tools, due to shield EU Member States from Crisis, the recently created "Facility" (EFSF) will grow up to a 440 Billions € lending capacity, which will become even stronger in the forthcming Permanent "Mechanism" (ESM) with 500 Billions €, the March 11 €uroZone Brussels Summit decided.

    Heads of State/Government "recalled" that this Mecanism "will provide Financial Assistance, when requested by a €uroArea Member State", if  it's  "indispensable to Safeguard the Stability of €uroArea as a whole", after "Unanimous" Decisions, and "on the basis of a Debt Sustainability Analysis of the ... State concerned, .. by EU Commission, IMF and ...ECB", "subject to strict Conditionality, under a Macro-Economic Adjustment Programme".

 

    This will "complement" the "Economic Surveillance", due to be set up by a "New (and) reinforced Economic Governance", on which work must be "finalized" "before the End of March" 2011, with "EU Commission's 6 Legislative Proposals","implementing" EU Council President Van Rompoy "Task Force's recommendations", (f.ex. on "Debt Reduction benchmarks", on "National Fiscal Frameworks", etc), "which will Focus on Prevention" so that "the probability of a Crisis arising in the Future" will be "substantially reduced".

-----------------------------------    

=> - "Since last May 2010, we (EU) took important Decisions : We supported Greece and Ireland ; we created a 1st Financial Facility with, initially, 140 Billions € ; we decided to Change the Treaty (and) to create a Permanent Facility ; we adopted a "Pact for the €uro", and we established an Economic Governance of €uroZone", French President Sarkozy resumed.

    - Moreover, we proved that "it's out of question to let an €uroZone State fail. It's out of question. We have already said that, we have already stressed that (because) It would mean great Troubles for €uro, (that) we don't want at any price. It's out  of question !", Sarkozy strongly stressed, as also German Chancellor Angie Merkel a.o.

-------------------------  

 Meanwhile, more spectacular were €uroZone Summit's decisions on so-called "Peripheral" Member States : Ireland, Greece and Portugal :

    - €uroZone "welcomes and supports" the "progress" made by a "Package of ... Measures, anounced Today (March 11) by Portugal, concerning Fiscal, Financial and Structural Reforms", according to the Summit's official conclusions, while Portugal has not yet asked any EU bail out, struggling to cope with its own means. as both French President Sarkozy and others noted

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
    - On Ireland, €uroZone Summit sticked merely into "welcoming the progress made by  .. Ireland", with the usual wording about "a strict and stable Fiscal framework", adding simply that Dublin must "stick to Fiscal targets, through Expenditure Decreases and Revenue Increases, as foreseen in the Programme".

    Converging sources clearly indicated that many "€uroZone" Countries (France, Germany, Spain, Greece, Austria,  Portugal, etc) were dissatisfied by Ireland's refusal to advance towards a rapprochement of Business' Taxation, probably because of Dublin's well known, attractive off shore Companies' area. Similar reluctances are notoriously expressed also by Cyprus, Malta, Slovakia, a.o. countries, but, at least, they don't ask any Money from the EU, contRary to Ireland, which, therefore, should, despite understandable difficulties, at least, make "a Gesture", (f.ex. with Different Rates, etc). That's why, the open issue of Interest Rates for Ireland's Loans was left to be decided by the next, March 24-25 Summit, observed French President Sarkozy.

    - On the contrary, Sarkozy presented mainly Greece, but also Portugal, as Countries which would be really doing important "Efforts", and, therefore, should be treated comparatively better :  - "All €uroZone Member States wanted to express their Support on the determined, couragerous and efficient conditions of implementation of Portugal's and Greece's plans. Thus, it's a strong "Satisfecit" which was send to these 2 Governments", he pointed out.

    - F.ex., in the framework of a wider, general "decision to align Interests Rates of EU's Mechanisms to that of IMF", as Sarkozy observed, or rather to "Lower" the "Pricing" of €uroZone Stability Mechanisms "to better take into account Debt Sustainabiliy of recipient Countries, while remaining above .. Costs.., with a .. mark up for Risk", as €uroZone's conclusions note, the March 11 Summit "applied these Principles" on the case of Greece, "in view of (its) Commitments .. in the context of its Adustment Programme :

=> Therefore, "the maturity for all .. Loans to Greece will be increased to 7,5 Years", instead of 4,5 initially, and "the Interest Rates of its loans will be adusted by -100 basis points", €uroZone Summit's conclusions declared. "I.e., Greece will reimburse on a Longer Period of Time, ... and it its s will be Less Expensive", explained Sarkozy.

Even if this Lowering of Interest Rates for Loans to Greece (from 5,2% to 4,2%, i.e. - 1%) is presented in €uroZone Summit's conclusions as an "application" of a General Decision  to "Lower the Pricing" of €uroZone Financial Stability Mechanisms, "in line with IMF pricing Principles", (i.e. should be normally applied to all €uroZone Countries concerned), nevertheless, both French President Sarkozy and (much more) Greek Prime Minister George Papandreou, as well as several Media, presented it as a special Decision concerning mainly Greece,  (and this seems, indeed, to be the case for the moment, in practice, since noone else has asked yet and obtainded a similar EU support).

 

The same goes also for another  Innovation decided by he 11 March 2011 €uroZone Summit :

- "Financial assistance" from €uroZone's Stability Mechanisms (ESM + EFSF) "will take the form of Loans. However, ... ESM and EFSF may, as an Exception, intervene in the Debt Primary market", €uroZone's conclusions add. This New possibility, due "to maximise the Cost-Efficiency of their support", should be used only "as an Exception", and only "in the context of a Programme with strict Conditionality", they say, (and this was also the way things were presented by French President Sarkozy).

But, both Greek Prime Minister Papandreou, and Finance Minister Papakonstantinou, speaking later to Journalists in Brussels, including "EuroFora", presented that also as a very favorable Measure almost responding to Greece's efforts :

- In practice, it means that, "this {€uroZone's) Mechanism can buy State's Bonds directly from any (Member) Country, as Greece, whenever needed". Indeed, "we (Greek Government) asked for that European Mechanism to be able to buy State Bonds, if a State needs more Time to convince Markets", explained the  Prime Minister of Greece, Papandreou, in his Press Conference late at Night in Brussels.

 

=> - "In fact, this is the most Important for us, because all the other facilities (i.e. Lower Interest Rates, Longer period of Time for Reimbursment, etc : See supra) might be good, but they'll act only at a Medium/Long term. While, on the contrary, this new possibility for €urozone's Stability Mechanisms to directly intervene also in the Primary Market of State's binds, can be applied immediately". Thus, taking all in account, "we can be sure at least for 2012", went on to add also the Greek Finances MInister, Papakonstantinou), speaking to Journalists in Brussels, including "EuroFora".
------------------------------------------------------
But, if all this was a positive €uroZone's move, the question remains  : What was the real Reason behind that ?

- French President Nicolas Sarkozy stressed, speaking later lto Journalists, including "EuroFora", after the conclusion of €uroZone's 2nd Summit,  that today's €uroZone's decisions easing the conditions of European support to the Greek Government's fight against a huge Debt from the Past, were mainly motivated by the fact that "Greece makes some real efforts" to redress the situation, as, f.ex.. a Privatisation package of 50 Billions €", as he pointed out.

- Indeed, €uroZone Summit's conclusions, from the outset "welcome ..the strong commitments by Greece to .... Fully and Speedily complete the 50 Billions € Privatization and Real Estate programme it has anounced".

+ As well as "to Rigorously continue Structural Reforms, increase capacity building for their Implementation, .... and to introduce a Strict and Stable Fiscal framework", as the official Conclusions add.

 -But both Prime Minister Papandreou and Finance Minister Papakosntantinou rather downplayed that specific point, the latter pointing at the "Privatization package that will be presented towards the end of this Month", i.e. later on March 2011, as he anounced.    
---------------------------------                                
    Prime Minister Papandreou, reacting to an "EuroFora"'s brief question, smiled as if he was positively surprised by French President Sarkozy's optimistic statements for Greece, earlier in Brussels (See supra). But, in fact, he might have guessed that, since they met earlier in Paris, told us, immediately afterwards, also Greek Minister for EU affairs, Marylisa Xenogianakopulu, while, however, keeping the "secret" smiling..

    Nevertheless, several commentators appeared surprised and still seek to find what might have been the Real Cause of what they see as a €uroZone's decision in favor of the Greek Government..
------------------------------
    Political Speculations turned around 2 topical issues currently concerning the EU : Turkey and Libya :

    * The 1st point (a traditional "Turkey" hypothesis), appears likely, considering also another notoriously suspected ¨Political Deal", between former "Socialist" EU Governments (France, Germany, the UK, Greece, etc) , eager to obey to former USA President Bill Clinton/Al Gore's attempts to impose Turkey's controversial and unpopular EU bid, in exchange of Greece's precipitated entry into €uroZone without previously doing required Reforms, so that the then "former"  Socialist Governmenti could win an imminent National Election on April 2001, (with less than 0,1%).. This resulted into EU's gravest Political Deadlock, with 3 "No" to EuroReferenda in France, Netherlands and Ireland (2005-2007), and provoked a Heavy hidden "Debt" in Greece, whose revelation endangered the entire €uroZone (2009-2010).

Today, the Unusual fact for the EU to start holding, the same Day of EU Summit in Brusse (March 11, 2011), also a 2 Days-long session of Foreign Ministers in Hungary (current EU Chair) with the exceptional participation of Candidate Countries' Ministers, including Turkey's Babacan, shortly after some politicians, f.ex. French President Sarkozy, just suggested a kind of "Compromise" to Turkey in order to avoid a Deadlock  in its controversial Negotiations with the EU, while even UNO's SG Ban Ki Moon notoriously eyes "the End of March" 2001 as a probable Date for important Decisions on Cyprus' reUnification Talks, the same Month (March 2011) that Turkey had warned since long that Ankara and some lobbies wanted to exert "Presure" on Cyprus.. Obviously, all these exceptional "Coincidences" cannot be simply overlooked.

But the Political situation inside the EU is not at all the same Today in 2011, to that which had existed back in 1999-2001, as far as Turkey is concerned. And, at any case, if the EU wished now ( on 2011) to eventually Stop Negotiating with Ankara, Europe would certainly not have to "pay Twice"  Turkey, (f.ex. by making this or that Political Concession in one or another issue) : Because Ankara has already been "paid", as it wanted, by a lot of EU Money (currently between 800 Millions € and 1 Billion € each year !) during these Lucrative so-called "Accession Negotiations", that the Turkish Government had officially asked (by a written, explicit demand which circulated in EU Parliament in Strasbourg at the beginning of  1999), just in  order    to find a way to start receiving EU Funds on the Basis of a New  Programme, since all other pre-existing EU Funding Programmes had been notoriously Blocked by Conditions asking to really respect Human Rights, Democracy and Rule of Law, that Ankara had already shown, for many  years, that it had no intenion at all to respect......

However, "EuroFora" saluted in Brussels Greek Foreign Minister Demitris Droutsas, and EU affairs Minister Marylisa Xenogianakopoulou, (former Head of Cabinet of f. EU Energy Commissioner Christos Papoutsis, currently Interior Minister), who curiously stayed with Prime Minister Papandreou in EU Council's headquarters up to almost 2 o'clock during the Night from Friday to Saturday, i.e. even after the end of EU's Summit on Libya/Mediterranean, also throughout the subsequent €uroZone Summit on Financial issues, while the EU "Gymnich" Foreign Ministers meeting had already started to unfold in Hungary much earlier, from Friday Morning...

It's also a fact that Foreign Minister Droutsas, who had willingly, kind and quite long exchanges with "EuroFora", back on January 2011 in Paris, strongly excluding any risk to yield to eventual Political Pressure in favor of Turkey over Cyprus' issue "on March" (a Deadline curiously chosen ...since December 2010 by Ankara's sources), likely to be exerted by some lobbies which might attempt to politically exploit the current Greek Government Debt worries, (by a Coincidence dated also on March 2011 !), on the contrary, now in Brussels, he hastily walked away, apparently running Fast to go to the "Gymnich" meeting of EU Foreign Ministers, exceptionally organized these same days in Hungary with the participation of 3rd, "Candidate" Countries' Ministers, including Turkey's Babacan.  

 Regardless of all those converging Factual Indications, neverththeless, any hypothesis of an eventual Political Deal related to Turkey, as things stand now, cannot be verified before knowing what may happen around the end of this Month (comp. Supra).                                                                                                                                                                                                                                  

    * On the 2nd point, (Libya : See supra), both some Diplomatic sources and some Media evoked the fact that, at the eve of €uroZone's Summit in Brussels, Greece had helped to free 2 EU Hostages in Libya and trasfert them safe to their Country (Netherlands), while also hosting (at Crete island) a lot of Refugees, (f.ex. Chinese, etc).

    It's also obvious that, for EU's Strategic decisions, taken the same Day by the Heads of State/Governement in Brussels, to eventually take action in Libya in order to protect People from Mlitary violence through "Humanitarian Corridors" and "Zones" (See "EuroFora"s earlier NewsReport on the extraordinary EU Summit's conclusions, earlier here), Greece's GeoPolitical position, as EU Member State close to Benghazi (where the "Libyan Transitional Councl" is headquartered) and Libya's borders to Egypt, added to the fact that Greece is one of the rare EU Countries which never occupied any North African Country in Modern History, so that it could not be suspected,  becomes an important key to forthcoming developments.

    Such a new Hypothesis might also give some Logic to the Paradoxical Fact for Europe to hold, at the Same Day, a Financial €uroZone Summit, and an EU GeoPolitical Summit on the dramatic on-going dvelopments in 3rd  Mediterranean Countries. (See earlier "EuroFora"s NewsReport from Brussels' EU and €uroZone Summits).
---------------------------------
    But, meanwhile, waiting to know what might be the most important related end of March developments (Comp. Supra), as things stand now, apparently, the most probable cause for €uroGroupe's decision on Greece apparently might, indeed, be   Athens' anouncement of an imminent 50 Billions € Privatization (See supra).