Wednesday

11th Dec 2019

Greek haircut is necessary evil, EU commissioner says

  • Almunia was economics commissioner until 2009 and is currently in charge of competition (Photo: ec.europa.eu)

The EU may have been wrong in asking private investors to write off Greek debt but it is too late to change track now, EU competition commissioner Joaquin Almunia has said.

The Spanish economist made the remarks at a debate hosted by the European Policy Centre, a Brussels-based think tank, on Monday (16 January) - two days before Greek negotiators were supposed to fly to Washington to restart talks on the so-called 'haircut.'

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 30-day free trial.

... or join as a group

"It's being discussed at many levels if the very idea of a private sector involvement was the right one or not - but now that it has been launched, we have to reach an agreement. Any other solution would be even tougher and riskier, that's why we need to find a happy end to these negotiations," he said.

EU leaders in October opted to loan Greece another €130 billion but only if it agreed with private bond-holders on a "voluntary" write-off of half its debt.

The clock is ticking before €14.4 billion of debt matures in eight weeks time. If there is no deal, Greece faces a "disorderly default" with unpredictable consequences for the eurozone.

Talks with the International Institute of Finance (IIF) - which represents private investors - broke off on Friday amid disagreement on the interest rates of new bonds. They are set to resume on Wednesday, a Greek spokesman said.

"It is essential in order to finalise the voluntary [private sector] agreement that support be given by all official parties in the days ahead," the IIF said in a statement.

For his part, Greek spokesman Pantelis Kapsis said on Monday that "this is a critical time for the Greek economy" and that "the negotiations are very difficult."

Apart from the IIF talks, Athens is also bracing itself for another inspection by officials from the EU, the European Central Bank (ECB) and the International Monetary Fund next week.

Responding to speculation that the Greek haircut will be less than 50 percent and that EU authorities will make up the rest, ECB chief Mario Draghi said last Thursday: "One thing is clear, namely that Greece has to bring its fiscal action back on track. It has to complete its structural reforms and basically has to move forward on the fiscal consolidation front."

Draghi also questioned the rationale of private sector involvement.

"[It] was, I would say, an understandable political response to the indignation of the people of Europe in the face of selfish behaviour by some governments, when making their fiscal policy and their budgetary policy. But this had several, serious unintended consequences, and we are living through them now."

Merkel urges Greece to implement debt deal

Chancellor Merkel has warned Greece it will not get any more EU money unless it finalises details of its second bail-out, such as how much private debt should be written off.

Greek debt talks stall ahead of Brussels meeting

Eurozone finance ministers are set to discuss the stalling talks between the Greek government and international banks on accepting losses on their Greek bonds - a key condition for Athens to receive a second bail-out.

EU commissioners go off-message on Greece

EU commission chief Barroso has said he wants Greece to stay in the euro, after one of his commissioners spoke of plans for it to leave and another one said an exit would not be so bad.

Feature

Promises and doubts: Africa's free-trade adventure

The EU is hoping that a continent-wide free trade agreement in Africa will help lift millions out of poverty and help solve issues of security and migration. But its message of values and equal partnership do not resonate with everyone.

Interview

EU Africa envoy: Europe needs to look beyond migration

Europe's obsession with migration from Africa means it risks losing out the continent's potential when it comes to trade, says the EU's ambassador to the African Union, Ranier Sabatucci. "Africa is a growing continent, it is the future," he says.

News in Brief

  1. Hungary asked to apologise after council leak
  2. MEPs: Finnish budget proposal 'impossible to implement'
  3. EP committee supports 'Future of EU Conference'
  4. EU survey: climate change must be parliament's priority
  5. Zahradil resigns as rapporteur on EU-Vietnam trade deal
  6. Russia plans 'Arctic Air Defence" with S-400 missiles
  7. Belgium: King does another round of consultations
  8. Thousands protest Orban's theatre clampdown

Feature

Promises and doubts: Africa's free-trade adventure

The EU is hoping that a continent-wide free trade agreement in Africa will help lift millions out of poverty and help solve issues of security and migration. But its message of values and equal partnership do not resonate with everyone.

Opinion

Why von der Leyen must put rights at core of business

Ursula von der Leyen's in-tray must include those European executives on trial for systematic workplace harassment, the break-up of European slavery rings, and allegations of European companies' abuse in palm oil, including child labour, land grabs, and deforestation.

Stakeholders' Highlights

  1. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  2. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  3. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms
  4. Nordic Council of MinistersNordic Climate Action Weeks in December
  5. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  6. Nordic Council of MinistersBrussels welcomes Nordic culture

Latest News

  1. Hungary quizzed over EU rules amid twitter row
  2. Spanish King meets party leaders to break deadlock
  3. EU alarmed by prospects of battle for Tripoli
  4. EU must manage climate and industry together
  5. Does Malta's Labour Party now belong in S&D?
  6. Green Deal targets pit Left against Right in parliament
  7. Human rights abusers to face future EU blacklists
  8. Zahradil 'conflict of interest' probe may flounder

Join EUobserver

Support quality EU news

Join us