15th Nov 2019

Greek haircut is necessary evil, EU commissioner says

  • Almunia was economics commissioner until 2009 and is currently in charge of competition (Photo:

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 year's 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.

EU and China agree to defend 'gastronomic jewels'

Manchego cheese, Panjin rice and Polish vodka will all be protected under a new EU-China agreeement. But the two trading giants continue to struggle over other trade-related deals.

News in Brief

  1. Germany: EU banking union deal possible in December
  2. EIB: no more funding of fossil-fuel projects
  3. UK defence chief: Russia could trigger World War III
  4. Hungary's Varhelyi will face more questions
  5. Police put former Berlusconi MEP Comi under house arrest
  6. MEPs criticise Poland for criminalising sex education
  7. UK will not name new commissioner before election
  8. Trump expected to delay EU car tariff decision


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 MinistersEarmarked paternity leave – an effective way to change norms
  2. Nordic Council of MinistersNordic Climate Action Weeks in December
  3. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  4. Nordic Council of MinistersBrussels welcomes Nordic culture
  5. UNESDAUNESDA appoints Nicholas Hodac as Director General
  6. UNESDASoft drinks industry co-signs Circular Plastics Alliance Declaration
  7. FEANIEngineers Europe Advisory Group: Building the engineers of the future
  8. Nordic Council of MinistersNew programme studies infectious diseases and antibiotic resistance
  9. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  10. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  11. Nordic Council of MinistersNo evidence that social media are harmful to young people
  12. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021

Latest News

  1. Corruption in the Balkans: the elephant in the room
  2. Green MEPs unconvinced by Romanian commissioner
  3. EU states fell short on sharing refugees, say auditors
  4. Hungary's commissioner-to-be grilled over loyalty to Orban
  5. Widow's plea as EU diplomats debate Magnitsky Act
  6. Leftist MEPs call on EU to address crisis in Chile
  7. Mustard gas and cod: Last chance to stop Nord Stream 2?
  8. Cultural Battlefield

Join EUobserver

Support quality EU news

Join us