Brussels, 23/06/2011 (Agence Europe) - Seven leading European figures met on Thursday 23 June to discuss the main elements of a declaration on the Greek debt crisis which is threatening to destabilise the eurozone, a few hours before the start of the European Summit (EUROPE 10403). Taking part in the select committee meeting, which was called by Berlin, were the German, French and Greek leaders and the Presidents of the European Council, the Eurogroup, the European Commission and the ECB.
Even though no decisions seem to be anticipated from the Summit, member states will send a message of conditional solidarity to Greece, to reassure the financial markets, which have been unsettled by contradictory messages, their international partners and the European citizens, who are concerned about their ability to find a definitive solution to the sovereign debt crisis in the Eurozone.
The leaders will acknowledge real results in the implementation of the current Greek austerity programme, such as a reduction of its public deficit by 5% in 2010. The EU, relieved at the confidence shown in Georgios Papandreou's reshuffled government, will urge Athens to adopt additional austerity measures on Tuesday 28 June (€28 billion in budget cuts and increased taxes) and to approve an accelerated privatisation programme, which is expected to bring in €50 billion by 2015. The country's institutional creditors (EU, IMF) have laid this down as a condition for the disbursement, early next month, of the fifth tranche of aide of €12 billion provided under the current Greek programme. “There is no plan B”: if Greece does what it has to do, Europe will do the necessary, said the Luxembourg Prime Minister Jean-Claude Juncker on his arrival at the European Summit. In Athens, where he met the troika (EU, ECB and IMF) on Thursday, Greek Finance Minister Evangélos Venizélos tried to modify the fiscal plank of the new Greek programme to take less money from incomes and more from the consumption of petroleum products.
The Europeans must bring pressure to bear on the Greek political opposition, which has refused to get behind the Greek government, in the hope of early elections. At the EPP Summit on Thursday (see other article), the leader of Nea Dimokratia, Antónis Samarás, once again rejected the recommended measures. “The policy implemented by the Socialists requires an increase in taxation in an economy which is being hit by an unprecedented recession (…). We need corrective measures to guarantee that the Greek economy resumes growth and pays back its debt”, he stressed.
Also to be discussed are the terms and conditions of the private sector contribution to the cost of the second financial bailout, of an envelope close to €100 billion, on the basis of the principles stated by Berlin and Paris and of the recent declaration of the Eurogroup (EUROPE 10400 and 10401). This means that the line defended by the ECB, in favour of the voluntary participation of private creditors, will prevail. Private creditors will be invited to buy back their Greek debt instruments under the same conditions when they expire (“roll over principle”). In many countries already (Germany, France, Belgium and Spain), the banking and insurance sectors have started to discuss with the authorities the details of their participation in the sector's contribution to a further bailout for Greece. We feel that “decentralised” discussions on a “roll-over”, whereby the finance ministries get in touch with private investors, constitute “the best method”, said the Commissioner for Economic and Monetary Affairs, Olli Rehn, at the Summit of the European Liberal Party.
The Europeans are set to take position on Barroso's proposals to provide additional assistance to Greece by means of a better absorption of the structural funds. (M.B./H.B./transl.fl)