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Merkel gives little away but hints she could be open to reforming EU migrants’ access to benefits

08 Jan 2015
At a joint press conference with Prime Minister David Cameron yesterday, German Chancellor Angela Merkel backed the “necessity” for curbs on migrants’ access to benefits but ducked a question on whether she would back EU treaty changes. “One has to take a very close look at the social security systems of individual member states – which are not part of communal law – to what extent they have to be adjusted to this situation.”

The Times reports that sources close to the German Chancellor later denied that she had intended to play down the prospect of treaty change drawing attention to her statement “where there’s a will there’s a way”.

FAZ
’s London correspondent Jochen Buchsteiner notes that Merkel is a pragmatist who wants to keep the UK in the EU and is therefore prepared to accommodate some of Cameron’s concerns. Writing in City AM, Open Europe’s Christopher Howarth argues, “EU reform is possible, and Cameron is right to see Merkel as key. The degree of EU reform achieved will be a key factor in the 2017 EU referendum… Anything short of real fundamental reform could risk a UK exit.”
Open Europe blog Times Mail Sun FT Reuters Telegraph BBC Independent Guardian FAZ FAZ: Buchsteiner City AM: Howarth

ECB raises concerns over liquidity of Greek banks;
Tsipras to demand “debt reduction” and “reparations” if he wins election
ECB Governing Council members are concerned that changes to ECB rules in March, which will stop banks being able to use state collateral to borrow from the ECB, could severely impact liquidity in Greek banks. 
In an interview with Channel 4 News, SYRIZA leader Alexis Tsipras said, “We are going to demand debt reduction, and the money Germany owes us from World War Two, including reparations, but we also want the [Parthenon] Marbles”. Meanwhile, EU Economic and Monetary Affairs Commissioner Pierre Moscovici told Le Monde, “Debt is not made to be written down.” Le Figaro notes that such a debt write-down would cost France €47.8bn.

Separately, an Alco poll for To Pontiki newspaper put SYRIZA on 31.6% and New Democracy on 28.6%. A GPO poll for Mega TV put them on 28.5% and 25.3% respectively. In both polls the new party launched by former Greek Prime Minister George Papandreou fell below the 3% threshold needed to enter parliament.
Kathimerini Kathimerini 2 Reuters WSJ Channel 4 News: Tsipras Le Figaro To Pontiki

AfD politician warns mainstream about ignoring rising anti-Islam sentiment
Alexander Gauland, Vice Chairman of Germany’s anti-Euro AfD party, yesterday warned that the Charlie Hebdo attacks in Paris show that “those who have ignored or ridiculed the concerns of many people about an impending threat from Islamism are punished by this bloody deed.” He added that the mainstream parties should “consider very carefully” if they will continue “defaming” Germany’s anti-Islamification Pegida movement. Meanwhile, a new study released by the Bertelsmann Foundation finds that German attitudes toward Islam are hardening, with 61% saying in 2014 that Islam is “not suited to the Western world” – up from 52% in 2012. Several Pegida demonstrations have been planned in Norway and Denmark reports Scandinavian media. Separately, Front National leader Marine Le Pen said this morning, “From now on, France must be at war with Islamic fundamentalism. They are at war with us.” 
Handelslblatt Welt Reuters Deutschland Spiegel Berlingske Le Figaro

Writing on his Forbes blog, Open Europe’s Raoul Ruparel argues that, despite yesterday’s negative inflation figures, the Eurozone is unlikely to enter a deflationary spiral. This is down to a number of factors including: downward nominal wage rigidity (stopping wages from falling), a weakening euro (importing inflation) and the transitory impact of energy price falls.

Forbes: Ruparel

A group linked to pro-Russian separatists in Ukraine yesterday claimed responsibility for a series of cyber-attacks on German government websites, including the Chancellery and Bundestag pages. Ukrainian Prime Minister Arseny Yatseniuk told ZDF TV that the attacks were the work of the Russian secret services.
FT WSJ Reuters FT Interview: Soros FAZ

Environment Minister Lizz Truss yesterday welcomed the prospect of a change in EU law that would let countries decide at a national level whether to plant GM crops. Environment ministers from across the EU agreed to make the change last June but it requires the approval of the European Parliament, which is expected to come at a meeting next week.
Times

Ireland yesterday sold €4bn in seven-year debt at a record low borrowing cost of 0.867%.
WSJ

EU trade commissioner Cecilia Malmström has announced yesterday that “For the first time ever the Commission is publishing specific legal proposals while we are negotiating a bilateral trade agreement.”
EuropeanVoice Euractiv EUobserver Irish Times

Figures compiled by German think tank Agora Energiewende, reveal that renewables were the number one source of power production in Germany for the first time ever in 2014, accounting for 26% of electricity generation.
FT      

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