Seven Days In Europe

Commentators and the markets were heralding a breakthrough in the eurozone crisis yesterday after leaders reached a deal with the world’s major banks under which they will accept a haircut of 50 percent on their holdings of Greek sovereign debt. Early on Thursday morning, EU Presidents Herman van Rompuy and Jose Manuel Barroso announced that an agreement had finally been hammered out with the Institute for International Finance, the association representing the banking sector, after hours of stonewalling by the banks, who had refused to accept a write-down of Greek bonds exceeding 40 percent. In the UK, Chancellor George Osborne has said the eurozone is on the “right road” but “pressure” must be kept on its leaders to put the debt deal into practice. He also insisted the UK would not pay into any International Monetary Fund package targeted at the eurozone.

In return for the deal, the EU members attest have imposed further monitoring measure on Greece. The new rescue package will include a “monitoring capacity on the ground” instead of current visits every three months by the troika of European Commission, International Monetary Fund (IMF) and European Central Bank lenders, the summit communique said.

EU monetary affairs commissioner Olli Rehn is to be given extra authority to supervise national fiscal policies, as the commission moves quickly to centralise economic governance powers in Brussels. The move is an important first step towards the calls from some member states to have a eurozone finance minister or at the very least a powerful economy commissioner.

Despite a deal being hammered out – growing doubts over the viability of the eurozone led to one of the biggest Conservative revolts of Cameron’s tenure as Prime Minister.  In a vote over whether to hold a referendum on Europe, 81 Conservative  MPs defied both Cameron’s pleas and a three-line whip to support the motion.  David Cameron has described the Conservative colleagues who took part in the largest postwar rebellion on Europe on Monday night as “valued” colleagues, insisting there was “no bad blood, no rancour, no bitterness” over their actions.

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