Brussels, 07/05/2010 (Agence Europe) - By the time the special summit of eurozone heads of state started on Friday evening, several countries had already passed new legislation to enable them to honour their pledges and provide aid to Greece. The eurozone politicians' meeting in Brussels will discuss the national measures needed to formalise the Greek support package and examine lessons to be learnt from this crisis for eurozone governance (EUROPE will report on the outcome of the summit in a special e-bulletin that will go online in the afternoon of Saturday 8 May). As the eurozone countries come together to express their solidarity with Greece and confirm the stability of the single currency, the politicians will be taking a long, hard look at credit rating agencies and their behaviour.
Final validation of Greek aid package. No changes are expected to be made to the decision by eurozone finance ministers last Sunday and the summit will basically amount to a political rubberstamp for the deal (see EUROPE 10131). On Thursday 6 May 2010, the Greek parliament gave the go-ahead to a €30 billion austerity programme by 172 votes to 121 and 3 abstentions, and several of the country's partners have already made the necessary arrangements, with the French parliament on Thursday and the German parliament on Friday approving the Greek aid package by a comfortable majority. On Friday, the Italian cabinet issued a decree to release the first section of the loans to Greece, the same day as the Spanish government issued a decree to the same effect. The Portuguese and Dutch parliaments have also given the go-ahead to their countries' contributions.
Eurozone Member States will provide Greece with loans of up to €80 billion over three years (€30 billion in the first year), their contributions being calculated in line with their share of capital in the European Central Bank (ECB), hence around €22.32 bn for Germany (27.9%); €16.8 bn for France (21%); €14.72 bn for Italy (18.4%); €9.76 bn for Spain (12.2%); €4.72 bn for the Netherlands (5.9%); €2.88 bn for Belgium (3.6%); €2.32 bn for Austria (2.9%); €2.08 bn for Portugal (2.6%); €1.44 bn for Finland (1.8%); €1.28 bn for Ireland (1.6%); €800 million for Slovakia (1%); €400 million for Slovenia (0.5%); €240 million for Luxembourg (0.3%); €160 million for Cyprus (0.2%); and €80 million for Malta (0.1%).
Credit rating agencies. Closely monitored by the markets, credit rating agencies have come under fire for their role in making the Greek crisis worse. Their behaviour is described as irrational, irresponsible and extremely irksome, explain Angela Merkel and Nicolas Sarkozy in an open letter published on 6 May 2010 (see EUROPE 10134), calling for greater competition in the rating agency business. Momentum has been building in recent days behind the call for a European rating agency to be set up, but this is not a new idea. The initial European Commission proposals did not include the setting up of a European rating agency but in debates on the draft regulation to introduce a registration and supervision system for rating agencies in the EU, MEPs said that a centralised European agency to issue credit ratings should be set up (see EUROPE 9868). They called on the Commission to issue proposals to this effect but the idea was sidelined in the end during negotiations with the EU Council of Ministers (negotiations that led to the draft regulation being adopted in first reading).
The new regulation, which comes into force on 7 December 2010, will be discussed at a special meeting in July convened to make a number of adjustments in line with the new rules on financial supervision. In agreement with the Council of Ministers' agreement in principle on the financial supervision package (see EUROPE 10032), the Commission will unveil proposals to turn the new European Financial Markets Supervision Agency into a body that would also supervise rating agencies registered in the EU. Earlier this week, the President of the European Commission, José Manuel Barroso, said that the option of going beyond this (particularly in regard to ratings of country's sovereign debt) was being examined (see EUROPE 10134), and the Internal Market Commissioner, Michel Barnier, also stressed that the debate was taking the long view. Barnier wants to see greater diversity in rating agencies but recognised that there were questions to be answered about the details, like the role of a European rating agency (whether it would only assess sovereign debt) and whether it should be a public or private body (see EUROPE 10132). The matter is of global concern, of course, and may well come up at the G20. Jean-Pierre Jouyet, chair of the French financial markets authority, commented this week that to ensure better regulation of sovereign debt ratings, the best solution would be to set up a joint public-private international agency under the aegis of the International Monetary Fund because a public sector European agency would have no credibility outside the EU's borders. (A.B. trans fl)