Brussels, 16/03/2010 (Agence Europe) - On Monday 15 March, Eurozone finance ministers clarifed technical details for support they may grant to Greece. Eurogroup still maintain that implementation of this plan it is not yet necessary and that the ultimate decision will be made by the European Council (but not necessarily at the Council on the 25th and 26th of March but which will be asked to decide upon it “if necessary”, explained Council president Herman Van Rompuy). No modalities for supporting Eurozone member states have been made official yet. They will only be made official if there is a decision to use the aid plan. Aid is expected to consist of voluntary bilateral loans.
At the end of the meeting, the president of Eurogroup explained that, “ we have clarified that technical modalities that will enable us to make a decision on coordinated action that could be rapidly activated if it proves necessary”. The president of Eurogroup also explained that, “the proposals that we make and which will be taken by the European Council will totally be in line with treaty provisions and national legislation”. Mr Junker affirmed that, “ an agreement would be made in a coordinated way, under the supervision of the Commission on what bilateral aid should be accorded”. He proved to be not particularly forthcoming with regard to information regarding how aid would be provided and would only state that, “the mechanism will not include loan guarantees”. Nonetheless, he did provide reassurances and acknowledged that, “all members of the eurozone will participate in this collective effort”. Although the idea of providing state guarantees on loans made by the Commission has been ruled out, the possibility of granting bilateral loans still exists.
A Eurogroup adopted declaration explained that the aim of providing aid would not be “to provide financing at average euro area interest rates, but to safeguard financial stability in the euro area as a whole” and, “to return to markets as soon as possible”.
Mr Junker is still insisting that, “for the time being this aid is not envisaged because the mechanisms are solid and measures are being taken”. He explained, therefore, that it was pointless revealing the contents of them because, “the Greek authorities have not requested financial aid from other Eurozone member states and consolidation measures such as those taken by the Greek government constitute an important contribution to reaffirming the budgetary situation in Greece”. Olli Rehn, the European Commissioner for Economic and Monetary Affairs, said that additional measures recently adopted by Greece put the country, “on the right track for obtaining the objective of a 4% reduction in their deficit this year”.
Mr Junker asserted that, “these measures ought to make the financial markets more confident”. Convinced that the measures taken by Greece are credible, the EU16 is now sending out the same message to the markets, “we have not decided on launching an instrument but we have talked about technical aspects and modalities that will enable us to make a decision”. This does not mean that Greece will be supported no matter what, but it will be supported if needs be. “ If we are expected to create the impression that despite all efforts taken and which will be taken by the Greek government, the markets do not respond in an appropriate way” the question of triggering such a mechanism may have to be posed, “but we do not think that it will be posed”.
On Tuesday, 16 March, the Ecofin Council also supported the evaluation made by the Commission on implementation of Greek austerity measures. In the eyes of George Papaconstantinou, Greece is also on the right track and borrowing costs will continue to improve. Addressing the press, the Greek finance minister even thought that his country was progressing ahead of schedule with the reforms and current deficit level. He welcomed the result from the meeting the day before, which enabled “serious headway for a final decision” to be made on possible aid. Mr Papaconstantinou recognised that certain points had to be clarified, perhaps those of major importance such as the amount (€20-25 billion has been mentioned), participant members states, interest rates and the duration of the loans, in addition to the question of conditions, which all certainly needed to be clarified. This is expected to be the case in the next few days or weeks and the European Council will be informed about all of the work undertaken. The next report on Greece, with regard to implementation of austerity measures, will be presented in the middle of May and will focus on medium-term forecasts for 2011 and 2012, in addition to reforms regarding pensions. (A.B.)