After EU summit, Samaras eyes 50bln reduction of Greek debt via ESM recap

Brussels – Greek Prime Minister Antonis Samaras has suggested that the decision of European Union leaders to rubber stamp agreements on measures to form a banking union gives hope to Greece that it could reduce its debt by another 50 billion euros of debt in the future.

Speaking in Brussels on Friday after the conclusion of a two-day EU summit, Samaras indicated that the creation of a single supervisory mechanism (SSM) for European banks would bring Greece a step closer to passing the cost of recapitalizing its banks to the recently-created European Stability Mechanism and not recording it as national debt.

“If this happens, this would allow banks to be recapitalized directly from the ESM, which means it won’t burden the taxpayer,” Samaras said at a news conference.

“Greece is very interested in this as it would mean our 50 billion euros in recapitalization costs would not be recorded as national debt.”

Athens completed a bond buyback scheme this week that reduced Greek debt by more than 20 billion euros, or almost 10 percent of GDP.

EU finance ministers agreed early on Thursday to create the SSM, giving the European Central Bank the powers to supervise major European banks.

The creation of this mechanism had been set as a precondition for the ESM issuing funds to recapitalize banks, although the eurozone’s AAA-rated countries had objected to the fund being used to finance what they termed “legacy” debt, in other words debt that had been built up before the creation of the SSM.

Samaras’s comments, however, indicated that the possibility of Greece’s public debt being reduced further by the ESM taking on the cost of recapitalizing Greek banks is still alive.

There remain, however, a number of issues – such as the creation of a deposit guarantee mechanism – for EU officials to resolve in the coming months in order to complete the banking union.

“The deposit guarantee mechanism means that Greek savers would feel safe and this would help liquidity,” said Samaras. “There has been progress [at the summit], perhaps not as much as some people wanted but there has been progress.”

The Greek prime minister stressed again the importance of the Eurogroup agreeing on Thursday to release 49.1 billion euros in funding for Greece over the next few months but emphasized the need for the government to focus on the task ahead rather than to celebrate its achievement.

“One marathon has finished successfully but we have to start another one,” he said. “Laurels smell good but they die quickly.”

Following the news conference, Samaras was due to meet with European Union Competition Commissioner Joaquin Almunia to discuss the use of structural funds. Samaras said he had asked Development Minister Costis Hatzidakis to fly in for the meeting.

He also said that he would meet on Monday with Finance Minister Yannis Stournaras and the heads of the multinational companies in Greece to discuss further investment in the country.

Samaras also touched on foreign policy issues, saying that the EU leaders had backed Greece’s position on its name dispute with the Former Yugoslav Republic of Macedonia (FYROM).

“There has been a very positive development,” he said. “For the first time, the European Council unanimously decided that the settling of the name issue with Skopje is a prerequisite for accession talks to take place.

“The message to Skopje is clear: they have to take real steps to settle this difference. There are two keys to open the door. They hold one and Europe holds the other.”

The Greek prime minister also referred to the civil war in Syria, calling for the protection of the Christian minority there. “I believe the Assad regime is close to collapsing,” he said.

Samaras added that he told his EU colleagues more had to be done to address the flow of migrants from Syria.

“There was an increase of at least 1,000% percent in the number of undocumented Syrian migrants trying to enter Greece over the summer,” he said.

“We have offered to provide 200 vessels to help transfer Syrians to safer countries. I asked the other prime ministers to look at what they could do.”

Returning to domestic issues, Samaras insisted that his government would not back down in its efforts to tackle unfair privileges in the public sector.

When questioned about comments by the head of the municipal workers’ union Themis Balasopoulos with regards to angry local authority workers “terrorizing” the government, Samaras replied: “We will terrorize the terrorists.”

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