Greek relief at eurozone safety net

Prime Minister George Papandreou yesterday expressed satisfaction and relief at a plan, rubber-stamped by his 15 eurozone counterparts in Brussels on Thursday, that essentially offers his debt-ridden country a financial safety net if it finds itself unable to borrow but also foresees the involvement of the Washington-based International Monetary Fund. «Europe has taken a step forward… Europe and Greece will emerge stronger from this crisis,» Papandreou told reporters at the conclusion of the two-day summit in Brussels yesterday, describing the decision as «an indisputable success.» Papandreou reiterated that Greece was «satisfied» with the plan, which sets out strict conditions requiring the approval of all eurozone members and which would only be used as a last resort. «We believe we will not need to use it,» the premier said, noting that his administration was committed to pushing through austerity measures heralded over the past few weeks. He reassured reporters that no additional measures would be introduced, remarking that the wage freezes, tax increases and cuts to civil servants’ benefits voted through the Greek Parliament earlier this month «were already enough.» Papandreou said the agreement hammered out by the eurozone leaders basically provided the vital political support Athens had been requesting for several months. «It means that Greece is not alone in the face of speculators,» he said. Papandreou admitted that a plan purely dependent on eurozone guarantees would have been better. «We would have preferred a completely European solution. We will make do with a European compromise,» he said. The premier also welcomed a parallel decision by European Central Bank President Jean-Claude Trichet that allows Greek banks to continue accessing ECB funding by extending lower loan collateral rates into next year. «Greece has regained credibility, its banking sector is not threatened,» Papandreou said. «We have already seen positive reactions in the markets,» he said, referring to a drop in government bond spreads and an increase in share prices. The reaction by the political opposition was less welcoming. «This is a time for reflection, not celebration,» Antonis Samaras, the leader of the conservative main opposition New Democracy said in a statement, saying his party has «serious reservations» about the eurozone plan. «So they want Greece to reach the point of bankruptcy before they help us?» the statement said. The Communist Party (KKE) predicted that the involvement of the IMF would oblige Greece to take more «measures that hurt the people.» «The participation of the IMF reveals the weakness of the EU,» a KKE statement said. Merkel pleased but IMF says little German Chancellor Angela Merkel, who played a decisive role in the structure of the deal to give financial assistance to Greece, yesterday hailed the agreement as the International Monetary Fund remained tight-lipped over the role that it could play in providing Greece with an emergency loan in the future. «I think that it demonstrated Europe’s capability to handle things and at the same time did something for the stability of the euro and for solidarity with a country that is in difficulty,» Merkel said just a few hours after the agreement among eurozone members was made public. «For us it is also important in the long term that the euro, which is such a success for peace and unity, remains stable. Yesterday was an important day for the euro,» the German leader added. French President Nicolas Sarkozy had to concede ground to Merkel for an agreement to be reached as he did not want the Washington-based International Monetary Fund to be involved in the scheme. «We had to reach a compromise to find a good and workable agreement,» Sarkozy said late on Thursday, revealing that two-thirds of the loans would be put up by eurozone countries. «We had to work hard to reach an agreement.» European Commission President Jose Manuel Barroso said that he hoped the conclusion of an agreement would end speculation by investors on the possibility of Greece defaulting. «I hope that financial markets will now act on fact and not on fiction,» he said yesterday. The IMF, however, appeared unclear about the role that it would play in any eventual rescue package and issued a statement yesterday simply saying that it was monitoring the situation. «We are following developments closely,» the fund said. Greece’s IMF borrowing quota is roughly 1 billion euros but according to rules adopted during the global financial crisis, it would be allowed to draw up to 10 times that amount.

Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.