Greece misses EU deadline on currency swaps

22.02.10 @ 16:49

  1. By Andrew Willis

BRUSSELS - Greece has missed a deadline to hand over information to the European Union, following recent allegations it used complex financial products to hide the true extent of its debt pile over the past decade.

  • The deadline for the handover of information was last Friday (Photo: wikipedia)

The news comes as a further embarrassment to the embattled Greek administration, already facing a major debt crisis and legal action over a budgetary deficit revision last October.

"Athens told us that the reason for the delay was partly due to the four-day strike which affected the ministry of finance," European Commission economy spokesman Amadeu Altafaj Tardio said at a news conference on Monday (22 February). The deadline was last Friday.

Greek customs workers ended a strike on Saturday, with the country's biggest union due to stage further protests this week.

The EU request for information relates to accusations published earlier this month that currency swaps, provided by Wall Street investment bank Goldman Sachs in 2001, enabled Athens to net a €2.4 billion loan that went undetected by EU monitors.

Athens insists the use of currency swaps did not contravene the bloc's rules at the time, adding that they were also deployed by other European capitals.

The missed deadline adds to doubts over the Greek administration's ability to handle it's current predicament however, and raises a question mark over Brussels' ability to stamp its authority on wayward national capitals.

And despite the fact that economy commissioner Olli Rehn made a clear request on 12 February for the information on the alleged use of the swaps, Athens is unlikely to face any consequences over the missed deadline.

"Consequences? No, not at this point," said Mr Tardio on Monday. Instead the EU is now seeking the information "as soon as possible".

"This is a bad signal," Cinzia Alcidi, a research fellow at the Brussels-based Centre for European Policy Studies, told this website. "It's a sign that it will be very difficult to ensure implementation of the plan Greece committed to."

EU finance ministers last week approved a Greek-government programme of spending cuts, designed to slash its deficit by four percent this year after it totaled 12.7 percent of GDP in 2009.

The commission could use tougher mechanisms at its disposal, added Ms Alcidi, citing the withdrawal of EU structural funds as an example, but so far there has been no sign of this.

€25 billion bail-out?

The commission also denied reports on Monday that euro area members are preparing a €20-25 billion aid package for Greece. German news magazine Der Spiegel reported that members of the single currency are preparing to bail out Greece to the tune of €20-25 billion, citing German finance officials.

Despite the denials, EU and member state officials are widely perceived to be preparing a mechanism to transfer financial support to the Aegean state if necessary, with Athens set to roll over roughly €20 billion in debt this April / May.

"They are putting everything in place in case there is a need," said Ms Alcidi.

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