EU SUMMIT:EUROPEAN LEADERS were last night poised to offer Greece the accelerated payment of some €1 billion in EU structural funding as they pressed Greek premier George Papandreou to ensure his MPs back a drastic new austerity and privatisation fund.
The release of such funds, proposed by European Commission chief José Manuel Barroso, is designed to provide a measure of relief to Greek MPs as they face nightly street protests in opposition to the swingeing terms of the country’s EU-IMF bailout.
The summit in Brussels comes amid serious concern about the potential for turmoil to ignite a new financial crisis. Diplomats said the Greek parliament’s confidence vote in Mr Papandreou’s new parliament was seen only to provide breathing space in advance of parliament’s vote next Tuesday on the new reform initiative.
Before they gathered last night for dinner, the leaders held political meetings in which the Greek opposition leader Antonis Samaras was asked to explain why his New Democracy Party would not back the new recovery plan.
Taoiseach Enda Kenny said as he emerged from a meeting of the European Peoples’ Party (EPP), Fine Gael’s group in the European Parliament, that the situation was very serious. German chancellor Angela Merkel and other centre-right leaders attended the meeting with Mr Samaras.
The summit, which continues today, comes as Mr Papandreou prepares for a parliamentary vote next Tuesday on a €78 billion package of cutbacks, tax hikes and privatisations. Uncertainty over the outcome has roiled markets and fanned anxiety in Dublin that the Government’s plan to regain access to private markets next year could be derailed.
“I have to tell you that leaders of the EPP, insofar as that’s concerned, are really, really concerned about the scale of the consequence of a failure in respect of a Greek vote next week,” the Taoiseach told reporters.
“The vote in the Greek parliament is absolutely crucial to the conditions that will apply for a new programme for Greece, if that’s to happen. People are well aware of the consequences if the Greek parliament decide not to accept the conditions for a new deal and in that sense there’s been quite a deal of focus on that point.”
Euro zone finance ministers and the IMF have blocked the release of a €12 billion bailout loan to Greece until MPs back the plan. Only then will they discuss in detail a second rescue package for the country.
A succession of leaders pressed Greek leaders to back the plan. “We will ask the leaders and citizens of Greece to rise to the occasion and do what must be done,” said Dutch prime minister Mark Rutte. “A nation undivided, focused and fully committed will not be abandoned.” The leaders are apprehensive about the risk of a new wave of turmoil spreading from the Greek crisis. “The risk of a serious financial crisis and start of a new recession are very high at the moment,” said Jyrki Katainen, Finland’s new prime minister.
The leaders were expected to issue a statement reiterating their readiness to release the crucial €12 billion loan to Athens and develop a second bailout deal for the country if parliament backs the latest austerity measures.
The message, modelled on a communique issued on Monday by euro zone finance ministers, was that Europe was prepared to help Greece if its politicians took the appropriate decisions.
EU economics commissioner Olli Rehn said the bottom line for Greece was that the EU authorities were ready to help the country return to growth “but the first thing is that Greece must help itself, so that the other Europeans can help Greece”.