Brussels, 16/06/2011 (Agence Europe) - Firefighting measures. With the agreement of the IMF, the Europeans will on Sunday 19 June make available the fifth tranche of aid of €12 billion to help Greece avoid defaulting on its payments. Between now and the meeting of the Eurogroup on 11 July, they will continue to negotiate a second bailout, designed to guarantee the country's financial needs in the medium term, working closely with the ECB and the IMF. On the ground, the political crisis has been worsened by the absence of political consensus on additional measures to adopt to comply with the budgetary commitments made in the Greek programme and to benefit from a financial extension of over €100 billion. This situation has led to new tension on the financial markets and caused the value of the euro to drop.
“I am confident that next Sunday, the Eurogroup will be able to decide on the disbursement of the fifth tranche of the loans for Greece in early July (…). In the same context, the Eurogroup on Sunday-Monday will discuss the contents and conditions of a successor programme for Greece, and the nature of private sector involvement in this, with a view to taking decisions at the next Eurogroup meeting of 11 July”, said Commissioner for Economic and Monetary Affairs Olli Rehn in a press release published on Thursday 16 June. “It's been difficult, but I strongly believe that with this two-step approach, in agreement with the IMF, we can avoid any accident scenario. It means that the funding of the Greek sovereign debt can now be ensured until September, while we take the decisions of the medium-term, beyond September, in July”, he added. He went on to warn that “the next days will be critical for the financial stability in Greece and Europe”.
Stressing the “cautious” nature of the commissioner, his spokesperson referred to the “concerted efforts” of the Europeans and the IMF. “If Mr Rehn is speaking in these terms, it is because he is confident that the decisions will be made”, he said. The IMF has made the disbursement of its contribution to an international financial rescue conditional upon a guarantee that the country being helped is in a position to honour its financial commitments within a year following the disbursement of the aid. An exception may be made for the Greek patient pending a transfusion of €12 billion, €3 billion of which will come from the IMF.
Rehn stressed that much of the responsibility for the Greek rescue operation rests “on the shoulders of the Greek authorities and all Greek political leaders”. He expects the “Greek Parliament to endorse the economic reform programme as agreed by the end of June” (EUROPE 10398). He lamented the failure of efforts on Wednesday to build “national unity” on the issue. An agreement of the Greek Parliament is “anticipated”, his spokesperson stressed. This will require the right-wing opposition parties to agree to the principal objectives of the programme, particularly the party Néa Dimokratía led by Antonís Samarás, and by a group of Greek Socialist MPs who are against any further austerity measures. “If it is possible in Portugal and Ireland, why not in Greece?”, asked Rehn. “There is no plan B”, said his spokesperson, declining to discuss what would happen if the Greek Parliament rejected the measures.
In the aftermath of a particularly well-attended general strike which saw many clashes with the police, Papandreou was preparing a government reshuffle on Thursday. A vote of confidence in the new team will take place on Tuesday. The Socialist government still has an absolute majority in the national parliament by just a handful of votes, despite the recent defection of two Socialist MPs. (M.B./transl.fl)