Thursday

28th Mar 2024

France and Germany suggest account for Greek debt funds

  • 'I honestly can't understand how additional days will help,' says Merkel as Greek talks drag on. (Photo: Valentina Pop)

France and Germany on Monday called for the creation of a 'blocked' account for Greece to pay down its debt, another sign of waning trust in Greek politicians whose negotiations on more austerity measures have dragged on over several deadlines.

"We propose that the interest on Greek debt is placed in a blocked account that will also guarantee that the debts of our Greek friends will be paid," French President Nicolas Sarkozy said during a joint press conference with German Chancellor Angela Merkel in Paris.

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The German leader said she also backed the idea of having the interest payments earmarked to an 'extra account' so as to "make sure that Greece will steadily make this money available."

The Franco-German plan comes only weeks after a leaked paper from Berlin suggested Greece should be placed under the supervision of a special budget commissioner appointed by the eurozone governments, causing outrage in Athens and finding little support in other capitals.

The government in Athens is struggling to secure cross-party political support for the further spending cuts demanded by the 'troika' of EU commission, European Central Bank and International Monetary Fund officials to secure a €130bn bail-out the country desperately needs to pay back debt due in March.

But talks have dragged on beyond a 'D-Day' set for Sunday, as parties refuse to sign up to wage cuts and pension freezes ahead of parliamentary elections set to take place in April. They had hoped that EU governments would step up their contribution, as an extra funding gap of some €15bn has emerged since the bail-out was politically agreed in October last year.

Germany and the other three 'triple A' rated countries - the Netherlands, Luxembourg and Finland - met on Friday in Berlin and made it clear that Greece should not expect any extra help, but bridge the gap through more spending cuts.

On Monday, Merkel showed little sympathy for the delayed talks: "I honestly can't understand how additional days will help. I want to reaffirm, there can be no agreement if the Troika proposals are not implemented. Time is of the essence. A lot is at stake for the entire eurozone."

The European Commission was also extremely downbeat on Monday. Economic affairs spokesman Amadeu Altafaj Tardio said Greece is "already past deadline" and late on delivering the reforms attached to the first bail-out, contracted in 2010. "These are not fresh austerity measures, we are not asking for anything extra. These are all promises they have already made," Altafaj Tardio said.

He also indicated that Greece should be able to make further wage cuts pointing out that, when the 13th and 14th month salaries are taken into account, the country's minimum wage averaged €871 a month. Spain, which is not under an EU-IMF programme, has a minimum wage of €748 while bailed-out Portugal's is at €566.

One of the 'troika' measures the Papademos government reluctantly agreed to on Monday is slashing 15,000 jobs from the public sector.

But the deal still has to be sealed by all political parties on Tuesday, amid a general strike called by the major trade unions.

Finance minister Evangelos Venizelos on Monday night accused political leaders of navel gazing at a moment when "national unity" is needed instead of "conventional, outdated, party confrontation as if nothing has happened."

Nerves fray as Greece extends bail-out talks

Greek talks on a vital €130 billion bail-out have gone into overtime as its government struggles to secure the backing of political parties for more spending cuts.

Berlin digs in heels on extra €15bn for Greece

Germany has ruled out any extra contribution from national governments or the European Central Bank to the second Greek bail-out - as requested by the Greek government. Meanwhile, sources close to the negotiations speak of a €15bn funding gap.

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.

"Swiftly dial back" interest rates, ECB told

Italian central banker Piero Cipollone in his first monetary policy speech since joining the ECB's board in November, said that the bank should be ready to "swiftly dial back our restrictive monetary policy stance."

Latest News

  1. "Swiftly dial back" interest rates, ECB told
  2. Moscow's terror attack, security and Gaza
  3. Why UK-EU defence and security deal may be difficult
  4. EU unveils plan to create a European cross-border degree
  5. How migrants risk becoming drug addicts along Balkan route
  6. 2024: A Space Odyssey — why the galaxy needs regulating
  7. Syrian mayor in Germany speaks out against AfD
  8. Asian workers pay price for EU ship recycling

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Stakeholders' Highlights

  1. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  2. UNOPSFostering health system resilience in fragile and conflict-affected countries
  3. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  4. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  5. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  6. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA

Join EUobserver

EU news that matters

Join us