EU inches toward aid for Greece
BRUSSELS – The members of the eurozone have agreed to the structure of a groundbreaking financial assistance package for Greece should it need it in its battle to restore the country’s public finances but the green light for the scheme will have to be given by European Union leaders, possibly when they meet at the end of next week, it was confirmed yesterday. Speaking after a meeting of EU finance ministers in Brussels, European Economic and Monetary Affairs Commissioner Olli Rehn said that Greece does not need any help at the moment but that almost everything was in place for it to be offered if necessary. «The Commission is ready to propose a European framework for coordinated and conditional assistance,» said the Finn. The development represents a major step for the EU as the Maastricht Treaty, which laid the foundations for the euro, includes a clause that precludes the EU, via the European Central Bank, from providing emergency funding to countries, like Greece, which do not comply with its deficit and debt criteria. «There is no loan facility at the moment, because Greece hasn’t asked for anything but if this is the case, I’m sure all the euro countries will be there,» said Elena Salgado, the finance minister of Spain, which holds the EU presidency at the moment. Speaking late on Monday night following a meeting of the 16 members of the eurozone, Rehn praised the recent austerity measures taken by the government in Athens as the «cornerstone» for stabilizing public finances. Jean-Claude Juncker, the prime minister of Luxembourg and head of the Eurogroup, said that the 16 countries had not decided how this money would be given to Greece. He did, however, suggest that it would not be in the form of loan guarantees and would probably involve bilateral loans, which will most likely be coordinated by the European Commission. «We think the question [of Greece needing assistance] will not arise,» said Juncker. None of the EU officials confirmed what amount would be made available but rumors in Brussels suggest that it will be between 20 and 25 billion euros. Greece needs to borrow 20 billion euros in April and May. The final details of the plan are expected to be finalized by EU leaders when they meet on March 25 and 26. However, German Finance Minister Wolfgang Schaeuble cast some doubt on how detailed an agreement had been reached by EU finance ministers, telling the lower house of the German parliament yesterday afternoon that a decision would only be made after Greece requests help. «We would have to react if insolvency were imminent,» which isn’t the case with Greece, Schaeuble told lawmakers in Berlin. Government officials hail ‘very positive’ move by eurozone ministers Greece welcomed a decision yesterday by its 15 fellow eurozone members to flesh out a scheme to provide it with financial help if it encounters further problems in dealing with its public debt and deficit burdens but Athens urged its partners to decide on the details of the plan as soon as possible. «We would like to have a loaded gun on the table and hope never to have to use it,» said Finance Minister Giorgos Papaconstantinou after a meeting of European Union finance ministers in Brussels yesterday. The government believes that having the funds available will mean that it can borrow at lower rates, as it could help drive the spread on Greek bonds down. Papaconstantinou was unable to give details of the plan but said that Greece would not be negotiating individually with other eurozone countries since there will be a «centralized» element to the scheme. Although the framework has the backing of all 16 members of the eurozone, it is clear that some countries will not be in a position to provide assistance. Already, Portugal, which also faces serious fiscal problems and last week announced austerity measures of its own, has said that it will not contribute any money to an assistance package. Papaconstatinou said that there are a number of «technical matters» about the form the support package will take that need to be cleared up over the next weeks, including which countries will take part and at what interest rates the money would be lent to Greece. Nevertheless, the minister was very upbeat about the deal that has been reached so far. «Today, we leave with a very positive sign for the work the government has done so far and for the possibility of a support mechanism should we need it.» He repeated that the public spending cuts and tax increases introduced over the last few weeks by the government were «tough» but «necessary» but said that the measures were already having an impact as Greece’s fiscal deficit last month was 1 billion euros whereas in February last year it had been 4 billion.