THE EU authorities are seeking a new set of binding commitments from Greek leaders to reform their economy during its second EU-IMF bailout, a demand that may further complicate already difficult talks on the plan.
The new wave of pressure on Greece is being led by northern countries such as Germany, Austria and the Netherlands.
“It’s better that we leave some room for the negotiations but it is clear and evident that we need convincing and firm commitments from all the leaders of the political forces . . . so that there is a broad political backing of the new second programme of Greece,” EU economics commissioner Olli Rehn said in Brussels.
Dutch finance minister Jan Kees de Jager said there was a consensus that time was running out for Greece.
“Greece must now finally move decisively with structural reforms and generate growth so that its debt becomes sustainable. Without that we cannot provide further loans,” he said.
Following two days of inconclusive talks between EU finance ministers, tension has escalated with Greece following its rejection of an offer from private creditors to accept a loss of some €100 billion on their bonds.
In question is the rate of interest to be applied on new Greek bonds under a debt exchange programme designed to cut the country’s national debt by 2020 from 160 per cent of GDP to 120 per cent, still twice the EU limit. Euro zone ministers are pushing for a rate below 3.5 per cent until 2020 but creditors represented by the Institute of International Finance want the rate to start at 3.5 per cent and climb to 5 per cent by 2020. “It’s important to all parties to recognise how much we have at stake here and that we work together co-operatively,” the institute’s chief Charles Dallara said yesterday.
While the ministers have urged Greece and its bondholders to reach a deal within days, certain senior figures expect the talks to drag on past an EU summit next Monday in Brussels.
Even though this would increase the risk of an uncontrolled default by Greece, many close observers believe the current stalemate reflects the hard bargaining that would be expected as talks near their conclusion.
However, the push for a new set of written pledges from Greek leaders reflects growing disquiet in Europe at the failure of the Athens government to execute reforms promised under its first EU-IMF programme.
The demand raises the prospect of yet more antagonism with Greek leaders, who are deemed to be in election mode ahead of a poll expected in the spring.
For weeks late last year the refusal of Greek conservative leader Antonis Samaras to sign a letter promising to implement the bailout terms held up talks to tackle the country’s financial crisis.
Mr Samaras signed up eventually but he remains opposed to austerity policies which he says are prolonging the country’s recession With the second bailout already contingent on a private sector involvement deal, the stance adopted by the euro zone powers points to a loss of patience with Greek leaders.
“We’re not pleased and only when there’s a written message on the table in front of us, can further assistance be discussed,” said Austrian minister Maria Fekter.
“We’re sending a very direct message to Greece that the community expects more, also in terms of structural reform.”
German minister Wolfgang Schäuble adopted a similar position, saying Greece must implement agreed measures. “Of course all Greek parties must agree to the measures and a new programme, independently of the upcoming elections,” he said.
Call for snap Greek elections coalition partner targets April date
ATHENS – Greece’s co-ruling conservative New Democracy party wants snap elections as soon as a new bailout deal is clinched, which would avoid a messy default, and no later than April 8th, its leader Antonis Samaras said yesterday.
He said Greece was in a long-term depression, rather than just a recession. But he also expects a deal with Greece’s creditors to be agreed by March 5th at the latest. Mr Samaras, whose party shares power in the coalition government of prime minister Lucas Papademos and is leading in opinion polls, said Greece needed a strong government to pull it out of a debt crisis threatening the euro and world economy.
He expects the bond-swap deal, that will mean private Greek bond holders take losses of 65-70 per cent, to be completed by the March date, in time for a second €130 billion international rescue package for Athens. “As soon as the new loan agreement is settled and the overall Greek debt is considered sustainable again we must go on with new elections,” he said. “The bond swap is expected to be over by March 5th, we can have elections on April 8th. There is not a moment to spare.”
Mr Samaras criticised austerity policy, saying it urgently needed adjustment before plunging Greece into an even deeper crisis. – (Reuters)
