Crisis election changes political landscape in Spain

The Spanish conservative People's Party (PP) regained power and fringe groups did well in elections on Sunday (20 November). The PP as predicted won an absolute majority of 186 places in the 350-seat lower house - the best result in the history of the party.
The centre-left PSOE, in power since 2004, received just 110 seats - the worst result in the history of its party. Meanwhile, smaller parties doubled their collective seats to 54.
Euobserver

Agreement on EU budget 2012

The Council and the European Parliament reached an agreement on the budget for 2012 at their meeting in the Conciliation Committee on 18 November. The agreement limits the increase of payments to 1.86% compared to the 2011 budget. The two institutions agreed to curb the total amount of payments for the 2012 budget to 129.088 billion euros. This corresponds to 0.98% of the EU's Gross National Income (GNI) and represents an increase of 1.86% compared to the updated EU budget 2011.
The agreed payments increase remains below the latest Commission inflation forecast of 2% for the EU in 2012, in real terms corresponding to a reduction of the EU budget. The EU thus rallies to the important efforts made by member states to consolidate their national public finances.
To cope with unforeseen situations, the agreement secures an important margin (12.4 billion euros) below the payments ceiling of the multiannual financial framework (MFF). The MFF fixes maximum amounts for each broad category of budget expenditure for several years, currently 2007-2013. At the same time, the budget allows targeted expenditure to support measures in favour of growth and employment in order to prevent the EU from slipping further into crisis.
European Council

Berlusconi Expected to Resign as Debt Plan Passes

Marking the end of a tumultuous week and of an era in Italian politics, Prime Minister Silvio Berlusconi was expected to resign on Saturday evening after Parliament approved austerity measures sought by the European Union.
The lower house passed the measures on Saturday by a vote of 380 to 26, a day after they were approved by the Senate, trying to keep a step ahead of market pressures that sent borrowing rates on Italian bonds skyrocketing last week to levels that have required other euro zone countries to seek bailouts.
The end of Mr. Berlusconi’s 17-year hold on Italian politics sets off the country’s most significant political transition in 20 years.
President Giorgio Napolitano, who as head of state will oversee the transition, was expected to begin consultations with party leaders to nominate a prime minishttp://www.blogger.com/img/blank.gifter immediately after Mr. Berlusconi’s resignation.On Saturday, the president appealed to lawmakers to put the country’s interests above their own. “All political forces must act with a sense of responsibility,” Mr. Napolitano said.
The front-runner to guide a new government appears to be Mario Monti, 68, a former European commissioner and a well-respected economist with close ties to European Union officials. On Wednesday, Mr. Napolitano named Mr. Monti a senator for life, an unexpected move seen as a prelude to receiving the mandate to form a government.
The mandate of the next government will be to push through measures to help reduce Italy’s $2.6 trillion public debt and increase growth to keep the country competitive. The austerity measures approved by Parliament include selling state assets and increasing the retirement age to 67 from 65 by 2026. They would decrease the power of professional guilds, privatize municipal services and offer tax breaks to companies that hire young workers.
Link

Papademos sworn in

Technocrat Prime Minister Lucas Papademos took office on Friday to save Greece from bankruptcy, heading a coalition cabinet filled with many of the same politicians who led the nation into crisis and pushed the euro zone to the brink of collapse.
As politicians in Italy pushed through austerity measures and contemplated an emergency government to stave off the crisis creeping deeper into the euro zone, Papademos said his priority would be to meet the terms of the country's EU, IMF bailout and pull Greece out of recession. "The final result will depend much on whether we succeed in stabilising the real economy, reining in unemployment and setting the ground to revive the economy and gradually boost employment in a relatively short time," he told his governing team in its first meeting. "That's why I would like to ask everyone to do his best in the next coming days, weeks and months."
More...

EU needs smaller, deeper group-Germany's Fischer

European Union with 27 members is incapable of agreeing needed reforms and the time has come to think about forming a smaller group of nations to advance the cause before it is too late, former German Foreign Minister Joschka Fischer said.
"Let's just forget about the EU with 27 members -- unfortunately," Fischer said in an interview with the German weekly newspaper Die Zeit. "I just don't see how these 27 states will ever come up with any meaningful reforms."
Fischer, a strong pro-Europe voice in Germany as foreign minister from 1998 to 2005, said the EU was under threat at the moment because of the euro zone debt crisis and he criticised the German government for poor leadership."We've got the worst German government since 1949," he said, but added Germany was strong enough to cope with that.
"We've got to watch out that we don't lose Europe," he said. "At the moment there is a great risk of that happening. The continent will survive without the euro but it would then nevertheless be dead as a political and cultural project."
Fischer said an "avant-garde" of the 17 euro zone nations could effectively take away the power from the 27 states. He said the smaller group should form a tighter group, following the lead of the Schengen passport-free travel zone in the EU. "What we need now is a 10-point plan for Europe, for a political union," Fischer said, adding Europe was heading towards a "transfer union" in the future in which wealthier nations would provide assistance to the less prosperous. "Anyone who denies that is just lying to themselves," Fischer said. Germans are nevertheless overwhelmingly opposed to any system where wealthier countries are obligated to support the poorer states.
Fischer said a euro chamber was worth considering, a body in which leaders from the national parliaments would take part. They would thus hold dual national and European responsibilities, Fischer said. "So those who have a say in their parliaments back home can also have a say in Europe," Fischer said.
Reuters

National unity government in Greece

Greece’s two mainstream political parties have agreed on a narrow pact for a national unity government after intense pressure from the EU, which warned that the country would be left to go bankrupt, perhaps within days, if a cross-party consensus was not achieved.

The centre-left prime minister, George Papandreou, loathed by millions of his fellow citizens for the imposition of far-reaching spending cuts, is to step aside once the new administration is in place, although who is to replace him has yet to be decided.

The coalition is tasked with approving a €130 billion EU-IMF bail-out deal, the second the country has been saddled with in the past two years, a package that will ensure that it is able to avoid bankruptcy and pay its largely central European creditors in return for years of austerity measures and international supervision of its finances.

The new administration will comprise the governing social democrats of Pasok and the right-wing New Democracy party. Papandreou had earlier approached Laos, a far-right religious party in the parliament and the Democratic Alliance, a small free-market liberal breakaway from the conservatives, to shore up his 152-seat majority in the 300-member house.

On Sunday, EU economy chief Olli Rehn had made it clear that without a coalition government, Greece would be cast adrift. He gave the country’s political elite hours to come up with a deal, ahead of a meeting of EU finance ministers on Monday evening.

Talks on a national unity government came after a long drama played out in the Greek parliament on friday. Papandreu survived a confidence vote on his government after a contentious move to hold a referendum on the Greek rescue deal put together in Brussels last week.

Europe delivered a stark ultimatum to Greece on Wednesday night, demanding that the country’s planned referendum ask plainly whether the country’s citizens wish to stay in the euro or to get out. "The question is whether Greece remains in the eurozone, that is what we want. But it is up to the Greek people to answer that question," Sarkozy said, adding that Greece would not receive "a single cent" if it does not adhere to the bail-out plan agreed last week.

Following the European reactions Papandreou has backed away from holding a referendum on a €130 EU bail-out deal and has agreed to talks with the conservative opposition over the construction of a transitional government leading to early elections.

Source: Euobserver

La BCE a abaissé ses taux

La Banque centrale européenne a réduit le taux de refinancement de 0,25 point à 1,25%. Économistes et marchés espéraient un geste de la part de la BCE en faveur des pays en difficulté de la zone euro, mais pas forcément sur les taux dès ce mois-ci. Mario Draghi a cependant rappelé les conditions du programme de rachat d'obligations d'Etats, à savoir "temporaire, limité quant au montant et justifié par le rétablissement du fonctionnement de la transmission de la politique monétaire par ses canaux ordinaires", mettant fin ainsi aux spéculations sur un renforcement de ce programme.
A la surprise générale, la Banque centrale européenne (BCE) a abaissé jeudi son principal taux directeur à 1,25%, a annoncé l'une de ses porte-parole, contre 1,5% précédemment. La BCE a également abaissé de 25 points de base ses deux autres taux directeurs, à savoir le taux de dépôt au jour le jour, qui est désormais de 0,5% contre 0,75% précédemment, ainsi que son taux de prêt marginal, passé à 2% contre 2,25% auparavant.
Economistes et marchés espéraient un geste de la part de la BCE en faveur des pays en difficulté de la zone euro, mais pas forcément sur les taux dès ce mois-ci.
L'echo