It’s all happening in Brussels. But don’t confuse activity with action.
The European Council summit (i.e. all leaders of the European Union) has concluded and the leaders of Poland (which currently holds the rotating Presidency) have been out briefing the press:
Wednesday, October 26, 2011 2:01:35 PM RTRS – POLAND’S PM TUSK: ANY ACTION TAKEN TO ENHANCE EURO ZONE MUST NOT UNDERMINE EU UNITY
Wednesday, October 26, 2011 2:05:19 PM RTRS – POLAND’S PM TUSK: NEED FOR 9 PCT RATIO FOR BANKS ADOPTED AT EU SUMMIT
Wednesday, October 26, 2011 2:11:55 PM RTRS – POLAND’S PM TUSK: BANK RECAPITALISATION WILL ONLY WORK WHEN OTHER FIREWALL MEASURES IN PLACE
Wednesday, October 26, 2011 2:13:29 PM RTRS – POLAND’S PM TUSK: ALL 27 EU MEMBER STATES ACCEPT NEED FOR BANK RECAPITALISATION, CLOSE TO FULL POLITICAL AGREEMENT
Wednesday, October 26, 2011 2:14:47 PM RTRS – POLAND’S FIN MIN: RECAPITALISATION PROTECTS AGAINST CONTAGION FROM GREECE
Earlier the FT received a draft of the communique that was provided to the eurozone leaders by the European Council leaders:
“The FT has received more details on the draft conclusions that were presented to the 17 eurozone leaders as they headed into Wednesday’s summit. The most interesting thing about the communiqué may be what’s not in it.
After a long section praising Spain for reducing its budget deficit, restructuring its banks, reforming its labour markets and adopting a constitutional balanced budget amendment is a blank section just labelled ‘Italy’. So far, there’s nothing in the section. Clearly, the eurozone leaders are still undecided whether efforts Silvio Berlusconi has made to date are enough to warrant the same praise as Madrid.
The sections on Greece still remain vague and inconclusive, a reflection of the still unresolved talks with Greek bondholders, which many now believe may not be completed in time for summit’s end.
The draft also for the first time makes clear that both proposals for enhancing the firepower of the €440bn eurozone bail-out fund – a first-loss guarantee scheme and a special purpose vehicle to be seeded with bail-out money – will be implemented at the same time. But it also calls on the ‘modalities to be completed by eurozone finance ministers sometime next month.
These documents always change before the summit wraps up, but it gives no reason to believe that specifics will be decided by the night’s end.”
Here are the details of the banking recapitalisation plan (click through to read in full):
The bank recapitalisation plan is effectively the same as we discussed in a post earlier on Wednesday.
Italy, as the FT notes above, is the gap that is still to be filled in, in more ways than one.
Its government, meanwhile, has stopped fighting long enough to send the EU its reform plan. Read it in full via the Corriere della Sera and Google Translate. Here’s the summary of its initial policy decisions — but a “full action plan” won’t arrive until November 15:
B. CREATING THE STRUCTURAL CONDITIONS FAVORABLE TO GROWTH
We are now engaged in creating the structural conditions conducive to growth. The Government considers it necessary to intervene on the composition of the budget to make it more conducive to growth.
With this objective, the Government intends to operate on four in the next 8 months:
- Within 2 months, the removal of constraints and restrictions on competition and economic activity, which permits, in particular in services, production levels and higher costs and lower prices;
- Within 4 months, the definition of an institutional, administrative and regulatory conducive business dynamism; - Within 6 months, the adoption of measures that promote the accumulation of physical capital and human capital and increase their effectiveness;
- Within 8 months, the completion of reforms in the labor market, to overcome the dualism and encourage greater participation.
Over the next 4 months, however, attacking priority firmly on North-South dualism that historically characterized the Italian economy and penalizes. This gap is expressed in a level of GDP in Central and Northern Italy, which equals the level of best European realities and to the south, which is located at the bottom of the European ranking.
In this regard, the government intends to make full use of structural funds, engaging in their comprehensive review, including those for infrastructure development in order to improve its use and redefine priorities in close cooperation with the European Commission. This revision will allow an acceleration, a reconsideration of the priorities of the use of funds and a strengthened directed, where Italy is willing to ask for technical support to the European Commission for the realization of this ambitious goal. The special program for the development of the South is defined in a manner evocative “Eurosud” and stems from the belief that growth is the growth of Southern Italy as a whole.
The Government, therefore, define and implement the strategic review of the programs financed by the Structural Funds 2007-2013. This revision responds to the recommendations of the Council of 12 July 2011 on the National Reform Programme of Italy.
It is based on a stronger concentration of investment programs better able to boost competitiveness and growth of the country, in particular addressing the untapped potential in the South, and a more stringent approach to the results of actions (education, broadband, railways, new jobs). This revision will result in a reduction in the rate of national co-financing of EU programs.
Resources made available as a result of this reduction will be programmed through a process of consultation between the Minister with responsibility for cohesion policies, the European Commissioner responsible and regions based on an enhanced cooperation with the European Commission through a special action group.
This action plan will be defined by November 15, 2011.
The creation of structural conditions for the growth of the entire country is inevitably for the revision of policies:
a. promotion and enhancement of human capital;
b. efficiency of the labor market;
c. opening of markets in key competitive;
d. Supporting entrepreneurship and innovation;
e. simplifying legislation and administration;
f. modernization of public administration;
g. efficiency and streamlining the administration of justice;
h. accelerating construction of infrastructure and construction;
i. Constitutional reform of the state.
And if that wasn’t enough, the FT also reports that Nicolas Sarkozy is due to talk to the leaders of China and Brazil tomorrow.
Stay tuned: long night ahead!
Related link:
Live eurozone coverage - FT