Brussels, 07/03/2011 (Agence Europe) - Meeting separately at the weekend to prepare for the special eurozone summit on Friday 11 March, European conservative and socialist leaders did not rule out renegotiation of the details of the international financial aid granted recently to Greece and Ireland (see EUROPE 10329). Any changes would, however, require something to be given in return, such as commitments to harmonising economic and budget policies.
In a statement published in Helsinki on Friday 4 March, the European People's Party (EPP), which includes most EU countries, including France and Germany, pledges to promote a regular reassessment of the international and European aid packages that may lead to changes in the current programmes. The EPP says that in return, consolidation programme measures would have to be changed in the country/ies in question. Talks are progressing on changes to criteria such as interest rates for the loans, which the new Irish government has been demanding stridently, or the duration of the loans. More flexible criteria may encourage Portugal to apply for aid (it is considered to be the eurozone country most likely to require such financial help).
The EPP believes, however, that any renegotiation of the aid should have what it calls jointly decided “benchmarks” attached, in the form of new measures needed, if necessary, to meet the agreed targets. On the establishment of a competitiveness pact mooted by France and Germany, the EPP says that eurozone countries are prepared to assess all measures taken, including measures covered by national sovereignty. It would be the European Commission's job to make proposals in areas over which it has power. By stating this, the EPP hopes to reduce the battery of criticism of the intergovernmental nature of the mooted pact.
Meeting in Athens (upon invitation from the socialist prime minister of Greece, George Papandreou), European Socialists and Democrats clearly defend Ireland and Greece, stating in a press release that the point of financial aid for troubled eurozone countries should be to encourage economic recovery and to this end, the financial aid already granted should be renegotiated, interest rates reduced and repayment periods lengthened. Accusing the conservatives of wanting to impose a neoliberal austerity agenda, the socialists say that encouraging economic competitiveness does not have to mean slashing wages and welfare. They call for a strategy of investing in the future and in infrastructure by means of a tax on financial transactions and the emission of Eurobonds, and announce an imminent awareness-raising campaign on the setting of harmonised social standards and the protection of social security systems.
EU Economic and Monetary Affairs Commissioner Olli Rehn has come out in favour of renegotiating the international financial aid package for Ireland (€67.5bn) and Greece (€110bn), telling the Monday issue of German newspaper Handelsblatt that he was concerned that too much was being asked of Greece and Ireland, along with over-stringent lending criteria. He said the Greek loan repayment schedule should be extended to seven years. On Monday, Greece commented that its latest downgrading by Moody's was totally unjustified.
Give and take. Before agreeing to provide greater aid to the rest of the eurozone, France and Germany are calling on struggling eurozone countries to make greater efforts. Under pressure domestically due to a difficult political situation, German Chancellor Angela Merkel is expected to take a strong line during the talks on dealing with eurozone sovereign debt crises. She said in Helsinki that it made no sense to give a breathing space if the criteria attached are not even tighter for countries requesting aid.
Attending the EPP meeting, the new prime minister of Ireland, Enda Kenny, argued his country's case, saying the Irish want changes and basically want to cut the cost of the aid package. At the weekend, Enda Kenny's party, Fine Gael, and Labour agreed on an economic programme echoing the austerity programme negotiated by the outgoing government. Cuts in spending and tax increases of €6 billion for 2011 will continue and be followed by €3bn of savings in 2012. Some 25,000 voluntary redundancies are planned from the civil service. On Monday 7 March, the Commission welcomed the news, praising the new government's pledge to keep up the pace of budget consolidation to bring the public debt back below the 3% GDP cut-off point by 2015. (M.B./transl.fl)