EUROPEAN GROUP finance ministers last night reached a deal to provide emergency bilateral loans to Greece, a landmark rescue in which Ireland would be obliged to take part as a member of the single currency.
Although the ministers still insist it remains within Greece’s powers to resolve its financial problems without leaning on the EU, they overcame deep reluctance to intervene with an agreement on the mechanics of a system of last-resort loans if Greece called for aid.
After a five-hour meeting, however, they left open questions as to the scale and scope of any loan package.
The deal came as Germany and France, most likely to be the prime participants in any rescue, found common ground on the question of how they would intervene.
Luxembourg prime minister Jean-Claude Juncker, who presides over the European group of ministers, said certain technical issues remained to be resolved, adding that the ultimate decision on any aid package would rest with EU leaders.
He ruled out the provision of loan guarantees to Greece but made clear that all members of the single currency would be expected to take part.
Late last night a spokesman for Minister for Finance Brian Lenihan declined to comment on the extent of Ireland’s participation in any rescue.
Although Greece must refinance some €25 billion in debt in the next two months, the country’s government has not yet made any application to the European authorities for special financial aid.
Prime minister George Papandreou has argued that exceptional help could help reduce the interest burden on his spiralling national debt.
However, the euro group ministers indicated in a rare statement that any rescue package would come at a steep cost to Athens.
With Greece already paying well in excess of average interest rates, the ministers indicated that the country does not stand to receive cheap financing.
“The objective would not be to provide financing at average euro area interest rates, but to safeguard financial stability in the euro area as a whole,” the statement noted.
Mr Juncker stressed that the Greek authorities did not ask for financial aid and added that the ministers believed a series of drastic austerity measures from Mr Papandreou’s government were an “important contribution” to an improvement in its fiscal position.
“I don’t think that loan guarantees will be decided and all the members of the euro will participate in this collective effort,” he said.
“The member states of the euro area will take co-ordinated action if such action turns out to be necessary.
“We clarified the technical arrangements which will enable us to take a decision on co-ordinated action, co-ordinated action to be activated swiftly in case of need.
“The proposals we shall make and submit to the European Council will be fully in line with the relevant provisions of the treaty and national law and will provide strong incentives to return as swiftly as possible to the markets.”
