Brussels, 31/08/2011 (Agence Europe) - The negotiations among the eurozone countries over granting guarantees that Finnish loans to Greece will be repaid only cover financial guarantees, explained the Greek finance minister, Evangelos Venizelos, on Wednesday 31 August on Greek radio, saying: “We are only speaking about guarantees of a financial nature...and guarantees that do not include claims on property. All the other countries that say they too want guarantees are saying that because they don't think it right that Finland should receive guarantees.” The European Commission, the European Central Bank and the International Monetary Fund are in Greece at the moment, examining the country's economic situation. The country's financial needs are covered up until the end of September this year, although the finance minister said that the recession would cut deeper than initially forecast. He is expecting GDP to shrink by 4.5%.
Nearly a fortnight ago, Finland announced that it had reached agreement with Greece that the latter would open a special bank account and would deposit several hundred million euros in it, which Finland would be able to access in the event that Greece defaulted on the share of the bailout provided by Finland (see EUROPE 10436). Several countries have criticised the move and are demanding similar guarantees for themselves, namely Austria, the Netherlands, Slovenia and Slovakia.
The business media report that several types of guarantee are being examined. The Wall Street Journal talks about real estate and shares in Greek public companies, whereas Handelsblatt says that shares in Greek banks are under discussion (an idea mooted by the head of the EU bailout fund, the EFSF, Klaus Regling). Greek gold reserves held at the country's central bank might also be considered, reports Euobserver.com.
The guarantees that Greece may provide would be offered to other creditor countries as an option, but at a cost. “If collateral is linked to fees - if they cost something just as a bank guarantee costs something - then everyone's desire for it will immediately be limited. These kinds of market-conforming models are under discussion now,” said the Austrian finance minister, Maria Fekter, at the Alpbach Economic Forum on Wednesday 31 August, stating that Austria wants the same guarantees as Finland might be offered.
In Paris, where he was attending a French business leaders' summer school, the president of the European Council, Herman Van Rompuy, urged eurozone countries to rapidly implement the decisions taken at the end of last month for the second Greek bailout and expanding the options available to the EFSF. He said that criticising decisions taken collectively is a strategic error and properly implementing the decisions is crucial for the credibility of the eurozone. Implementing the full decision, as agreed upon on 21 July, is the top priority, he added. (M.B./transl.fl)