FINANCE MINISTERS in the euro zone stopped short late last night of spelling out how they would rescue Greece as they imposed a 28-day deadline on the country to show that its budget programme is working.
If the plan is shown not to yield dividends four weeks from today, Greece would be excluded from a vote of European governments on additional measures they plan to impose on the administration of prime minister George Papandreou.
Striking a defiant tone in the face of demands from the financial markets for specific information about the bailout mechanism the European authorities would deploy “if needed”, euro group president Jean-Claude Juncker said it would be unwise to discuss them publicly.
“We have not wished publicly to pronounce today about the instruments that we would mobilise were they to be made available throughout the euro zone to maintain its financial stability because we do not feel that it would be wise to have a public discussion of such instruments,” he said.
“But if those instruments are called for then you can take it that we will have those instruments.”
Arguing that the “financial markets are completely wrong to think they can destroy Greece”, Mr Juncker said the EU was operating on the basis that any rescue endeavour would be superfluous.
Mr Juncker and EU Economics Commissioner Olli Rehn had signalled in advance of the meeting that they wanted new measures from Athens, something Mr Papandreou’s government resisted strongly.
While the Greek government won an apparent reprieve, Mr Juncker said the administration has “agreed in principle” to have additional taxation and spending measures imposed if it cannot show its current plan is yielding dividends within 28 days.
Amid acute doubt about the prospects of Greece meeting the objectives set for it, the development takes the European authorities a step closer to external intervention in the Greek economy.
“We think that the stability programme proposed by the Greek government is an ambitious one. Now were we to find that a number of risks had materialised which would prevent Greece from meeting the objective that they’ve set themselves and that we have set for them then they’ve agreed to take additional measures – and the Greek government would negotiate the content of those measures with Mr Rehn and his services,” Mr Juncker said.
“The euro group is going to vote on the basis of qualified majority on further measures if we consider further measures necessary.”
Mr Rehn said he will soon propose new measures that would broaden economic monitoring of EU states. “The critical lesson we have learned ... is that we urgently need broader and deeper surveillance.”
