Brussels, 09/07/2012 (Agence Europe) - After getting its way at the last European summit (see EUROPE 10645) by arranging for the ESM to be able to lend directly to banks, Spain might not now be the first beneficiary of the new set-up. Germany is now demanding that the direct recapitalisation of banks by the eurozone bailout fund will require the setting up of a single European bank regulator, which the German finance secretary, Wolfgang Schäuble, says is not likely this year: “Before direct aid is given to the banks, there must be a common banking supervisor. But this body will not start functioning this year. That is not very realistic.” In an interview with Spanish newspaper El Pais on Sunday, he said it was not possible for the new regulatory system to be up and running this year, as the rest of the eurozone hoped. His comments amount to saying that recapitalisation of Spanish banks will have to go through the Spanish state, and worsen its debt.
To satisfy lenders, the Spanish prime minister, Mariano Rajoy, announced a raft of measures on Saturday 7 July to cut the public deficit, some of which Rajoy says are due to come into force later this month. The measures will be submitted by Rajoy to parliament on Wednesday 11 July.
Greece asks for more time. The new Greek finance minister, Yannis Stournaras, said during a debate at the Greek parliament on Saturday 7 July that more time would be needed because of the recession, in order to introduce the reforms agreed upon by Greece and its lenders as part of the bailout programme. Greece is supposed to sort out its finances by 2014, but the new Greek government says that 2014 is far too early: “The extension of the budgetary adjustment is necessary because of the recession. … We must adopt the measures included in the second loan in February so that we do not threaten the release of this loan.” Evangelos Venizelos, head of PASOK, the Socialist party which is part of the coalition government, insisted on the need to agree on a new, updated, medium-term fiscal strategy programme, a statement from his office said on Saturday. He raised the question of revising the bailout in line with the procedures foreseen in it, and extending the time period of the fiscal adjustment to three years (until the end of 2017) and adjusting the programme as recommended by the 29 June European summit, which recommended growth stimulus measures. The troika fact-finders have been in Greece since 3 July and have said it is time for Greece to resume the reform programme that had been put on hold during the elections.
The new Greek finance minister will have to explain to the Eurogroup on Monday evening how Greece is planning to get the memorandum back on track (see EUROPE 10650). The Spanish memorandum is due to be finalised later this month. (EL/transl.fl)