Dejavu of Monday May 10, 2010????
Greek debt crisis: eurozone ministers delay decision on €12bn lifeline
Finance ministers say Athens needs to push through austerity measures before they agree to bridging finance in July
Ian Traynor in Brussels and agencies
The Guardian, Monday 20 June 2011
Eurozone governments have postponed a final decision on whether to throw debt-mired Greece a summer lifeline, saying Athens must force through harsh austerity measures before they will release €12bn (£10.6bn) of funds to keep the country's economy afloat and avert an international crisis.
The 17 eurozone finance ministers met until the early hours of Monday in Luxembourg to hammer out the structure of a new three-year bailout for Greece in a way that would persuade European banks, pension funds and other private creditors to roll over the country's ballooning debt.
A statement, issued after seven hours of deliberations, committed the ministers to putting together a second bailout plan for Greece, beyond the initial €110bn euro rescue launched in May last year. In addition to more official loans, the new bailout would include a voluntary rollover by private investors of their Greek debt holdings. The statement did not say how large the new plan would be or give details of the rollover.
The Belgian finance minister Didier Reynders said a final decision on the €12bn that Greece urgently needs would be made in early July, and depend on the prime minister, George Papandreou, surviving a vote of confidence.
"To move to the payment of the next tranche, we need to be sure that the Greek parliament will approve the confidence vote and support the programme," he said. "So the decision will be taken at the start of the month of July regarding the complete financing strategy and the next tranche and the definitive programme."
Jean-Claude Juncker, the Luxembourg prime minister who heads the Eurogroup, said: "We have agreed today that the contribution [of the private sector] must be voluntary, but ... Greece also has to deliver. If you aim for a voluntary private contribution you can't fix what size it must be beforehand. That also has to be discussed with private creditors.
"We very much depend on Greece's parliament passing all bills and we will discuss more about the role of private creditors at the beginning of July, but the role will be voluntary and we will have to check whether Greece will by then have fulfilled its obligations."
The meeting took place amid a mood of growing futility over Greece and pessimism over the fate of the euro. "We wouldn't be able to control an insolvency," warned the German chancellor, Angela Merkel. "We all lived through Lehman Brothers. I don't want another such threat to emanate from Europe."
Juncker warned that Italy and Belgium, rather than Spain, could be at risk if the new bailout being negotiated for Greece involved losses for creditors and the financial markets then declared Greece to be in default.
On Friday in Berlin, Merkel admitted defeat in a fight with the European Central Bank, dropping German insistence that the international banks should take part in the proposed bailout by swapping existing bonds for new paper with a seven-year maturity, giving Greece time to try to recover. At the weekend she reiterated that private creditor involvement should be "substantial", but admitted there was no way of ensuring this.
Germany is the biggest player in bailing out Greece, but the commitment of taxpayers' money is deeply unpopular. Merkel's volte-face on Friday earned her biting criticism in the weekend media.
After a year in which Greece has already received €53bn in bailout funds, only to see the crisis worsen, doubts are growing over whether the embattled Greek government will be able to deliver the savage spending cuts being demanded as the price of rescue.
Amid a sense of deepening panic and gloom, leading European industrialists are to take out full-page adverts in the French and German press on Tuesday pleading for intervention to save the euro. "A return to a stable financial situation will cost many billions of euros, but the European Union and our common currency are worth every effort," says the advert.
Top German economists lined up at the weekend to accuse Merkel and other EU leaders of "political failure". The Greek government was also a target.
"It is disappointing that the Greeks are not grateful for the help from Germany and the EU," Hans-Werner Sinn, head of Munich's IFO Institute, told the Frankfurter Allgemeine newspaper.
The cover story in Monday's edition of the influential Hamburg weekly Der Spiegel, is "an obituary for the common currency."
Britain, meanwhile, stressed that it wanted no part of any new Greek rescue, except through its participation in the International Monetary Fund.
"It's the eurozone that is taking forward discussions now about the next stage of dealing with Greece's substantial problems," the chief secretary to the Treasury, Danny Alexander, told Sky News. "There's simply no proposition on the table for the UK to contribute beyond IMF involvement and I don't expect there to be one."
That could change if the EU decides to use an emergency bailout fund administered by the European commission for the rescue. Britain is liable for a share of this and any decision would be taken by qualified majority vote, meaning the Cameron government would not be able to wield a veto.
Greek debt crisis: eurozone ministers delay decision on €12bn lifeline
Finance ministers say Athens needs to push through austerity measures before they agree to bridging finance in July
Ian Traynor in Brussels and agencies
The Guardian, Monday 20 June 2011
Eurozone governments have postponed a final decision on whether to throw debt-mired Greece a summer lifeline, saying Athens must force through harsh austerity measures before they will release €12bn (£10.6bn) of funds to keep the country's economy afloat and avert an international crisis.
The 17 eurozone finance ministers met until the early hours of Monday in Luxembourg to hammer out the structure of a new three-year bailout for Greece in a way that would persuade European banks, pension funds and other private creditors to roll over the country's ballooning debt.
A statement, issued after seven hours of deliberations, committed the ministers to putting together a second bailout plan for Greece, beyond the initial €110bn euro rescue launched in May last year. In addition to more official loans, the new bailout would include a voluntary rollover by private investors of their Greek debt holdings. The statement did not say how large the new plan would be or give details of the rollover.
The Belgian finance minister Didier Reynders said a final decision on the €12bn that Greece urgently needs would be made in early July, and depend on the prime minister, George Papandreou, surviving a vote of confidence.
"To move to the payment of the next tranche, we need to be sure that the Greek parliament will approve the confidence vote and support the programme," he said. "So the decision will be taken at the start of the month of July regarding the complete financing strategy and the next tranche and the definitive programme."
Jean-Claude Juncker, the Luxembourg prime minister who heads the Eurogroup, said: "We have agreed today that the contribution [of the private sector] must be voluntary, but ... Greece also has to deliver. If you aim for a voluntary private contribution you can't fix what size it must be beforehand. That also has to be discussed with private creditors.
"We very much depend on Greece's parliament passing all bills and we will discuss more about the role of private creditors at the beginning of July, but the role will be voluntary and we will have to check whether Greece will by then have fulfilled its obligations."
The meeting took place amid a mood of growing futility over Greece and pessimism over the fate of the euro. "We wouldn't be able to control an insolvency," warned the German chancellor, Angela Merkel. "We all lived through Lehman Brothers. I don't want another such threat to emanate from Europe."
Juncker warned that Italy and Belgium, rather than Spain, could be at risk if the new bailout being negotiated for Greece involved losses for creditors and the financial markets then declared Greece to be in default.
On Friday in Berlin, Merkel admitted defeat in a fight with the European Central Bank, dropping German insistence that the international banks should take part in the proposed bailout by swapping existing bonds for new paper with a seven-year maturity, giving Greece time to try to recover. At the weekend she reiterated that private creditor involvement should be "substantial", but admitted there was no way of ensuring this.
Germany is the biggest player in bailing out Greece, but the commitment of taxpayers' money is deeply unpopular. Merkel's volte-face on Friday earned her biting criticism in the weekend media.
After a year in which Greece has already received €53bn in bailout funds, only to see the crisis worsen, doubts are growing over whether the embattled Greek government will be able to deliver the savage spending cuts being demanded as the price of rescue.
Amid a sense of deepening panic and gloom, leading European industrialists are to take out full-page adverts in the French and German press on Tuesday pleading for intervention to save the euro. "A return to a stable financial situation will cost many billions of euros, but the European Union and our common currency are worth every effort," says the advert.
Top German economists lined up at the weekend to accuse Merkel and other EU leaders of "political failure". The Greek government was also a target.
"It is disappointing that the Greeks are not grateful for the help from Germany and the EU," Hans-Werner Sinn, head of Munich's IFO Institute, told the Frankfurter Allgemeine newspaper.
The cover story in Monday's edition of the influential Hamburg weekly Der Spiegel, is "an obituary for the common currency."
Britain, meanwhile, stressed that it wanted no part of any new Greek rescue, except through its participation in the International Monetary Fund.
"It's the eurozone that is taking forward discussions now about the next stage of dealing with Greece's substantial problems," the chief secretary to the Treasury, Danny Alexander, told Sky News. "There's simply no proposition on the table for the UK to contribute beyond IMF involvement and I don't expect there to be one."
That could change if the EU decides to use an emergency bailout fund administered by the European commission for the rescue. Britain is liable for a share of this and any decision would be taken by qualified majority vote, meaning the Cameron government would not be able to wield a veto.