Brussels, 13/10/2011 (Agence Europe) - Speaking after a meeting on Thursday 13 October with the president of the European Council, Herman Van Rompuy, the Greek prime minister, George Papandreou, said that the sovereign debt crisis provided an opportunity for Greece to change itself and expand the European project. He said the crisis could be turned into an opportunity for Greece and for Europe as a whole. He hoped the 23 October European summit would provide a detailed, sustainable solution to the crisis in the eurozone, deepening integration and economic governance and strengthening the EFSF bailout fund and European banks. He added that the decisions on Greece should be in line with the decisions taken by the special eurozone summit on 21 July.
On 21 July 2011, eurozone leaders approved the mechanics of the second Greek bailout (2011-2014), which will provide public aid of around €110 billion and a voluntary contribution from the private sector of around €37bn (see EUROPE 10424). The financial industry says it is prepared to agree to a downgrading of the value of the Greek debt, now that the stormy seas on the money markets have wiped off around 20% of the value of Greek bonds. Under pressure from Germany, the eurozone is now examining greater private sector involvement (up to 50%, possibly even 60% according to comments made by Luxembourg's prime minister, Jean-Claude Juncker, on an Austrian television station, later brushed off as a “misunderstanding”). Increasing the devaluing of Greek bonds increases the risk of the country defaulting and jeopardises the financial stability of certain banks.
Papandreou also met with Juncker, explaining his government's action to stimulate competitiveness and investment. He said that Greece has huge economic potential that has been badly managed in the past. The European Commission's taskforce on Greece has held its first high-level meeting in Athens to discuss making better use of EU Structural Fund cash in the country. The aid will focus on three areas - growth and jobs; tax collection; and reforms of the labour market, public health, justice, the civil service, and waste management.
Slovakian government's go-ahead for giving EFSF more teeth. The refusal by the Slovakian parliament to endorse the changes to the EFSF bailout fund has caused the centre-right coalition government to collapse and the opposition social democratic party has been assured that new general elections will take place in March 2012, as long as the social democrats ratify the decisions of the 21 July eurozone summit decisions. The parliament voted again on Thursday 13 October, and ratified the changes in the second vote. This makes Slovakia the 17th and last eurozone nation to agree to increase the EFSF's lending capacity to €440 billion and give it greater teeth (allowing it to buy up struggling countries' debt and lend cash to countries so that they can bail out their banks).
Changing the EU Treaty. At a conference organised by Friends of the Earth on Thursday, the president of the European Commission, José Manuel Durão Barroso, said that changing the Treaty “is not a solution to our current problems. We can be more ambitious in increasing the firepower of our instruments without Treaty changes. We can enhance growth without Treaty change.” A Treaty change would be needed to set up eurobonds to pool a share of eurozone debt, however, he said. Barroso will be in Paris on Friday for talks with the French president, Nicolas Sarkozy, at a meeting to prepare for the 23 October European Council. (MB/transl.fl)