Brussels, 17/06/2011 (Agence Europe) - On Friday 17 June, French President Nicolas Sarkozy and German Chancellor Angela Merkel took pains to reassure the financial markets, which are worried about how Europeans are struggling to agree on the details for the contribution of the private sector to a second bailout for Greece. After a joint meeting to prepare for the European Council of Thursday 23 and Friday 24 June, the leaders of the two main economies of the eurozone stated that they would do all in their power to preserve the stability of the single currency. In favour of a rescue package involving private creditors, they have laid down four fundamental principles: - this involvement must be voluntary; - it must not cause a “credit event” which could lead to a chain reaction on the market; - the wording decided upon must have the approval of the ECB; - a decision will be taken as soon as possible, in July.
“We need a new programme for Greece” and in return, the Greek Parliament must “imperatively” approve the new austerity plan, said Merkel. The voluntary involvement of the private sector will be negotiated “together” with the ECB, she added. “There is no time to lose”, Sarkozy stressed: the principles have been laid down, the details must be worked out “extremely quickly”. A number of observers have read into this a greater degree of flexibility in the German position, which pleaded for the majority of the loans granted to Athens to be extended by seven years. The ECB, supported by France, is in favour of keeping in place the exposure of the private creditors by allowing them to buy back the debt instruments under the same conditions once they expire.
In the face of the hostility of the Greeks towards the additional austerity measures, Prime Minister George Papandreou has reshuffled his cabinet, appointing the former defence minister Evangelos Venizelos to the finance portfolio. The president of the European Commission, José Manuel Durão Barroso, hopes that the Eurogroup will be in a position to resolve its “differences”, and said that he was confident that if Greece fulfils its role - by sending out a clear signal that it accepts the European aid in exchange for increased budgetary austerity - the Europeans will also play their part. From Dublin, the president of the European Council, Herman Van Rompuy, called on all Greek politicians to take their responsibilities and agree to the austerity measures proposed, a vital precondition for any further financial aid to be granted.
The Eurogroup meeting of Sunday 19 June has been asked to give its green light to the disbursement of the fifth tranche of aid of €12 billion provided for by the current Greek programme. It will continue talks on the terms and conditions of the second rescue package, ahead of decisions to be taken in July (see other article). (M.B./transl.fl)