Saturday

20th Oct 2018

Greek bail-out to be renegotiated this summer

It would be "stupid" and "delusional" to expect Greek bail-out conditions and deadlines to remain unchanged, given political delays and the worsening recession, a senior EU official told journalists in Brussels on Tuesday (19 June).

"Anybody saying we need not and cannot renegotiate the memorandum of understanding is delusional because he or she would be understanding that the whole economy has remained completely on track," the contact said ahead of a meeting of eurozone finance ministers on Thursday in Luxembourg.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

  • Greek salad: When a trucking licence costs tens of thousands of euro, it becomes cheaper to fly in Dutch tomatoes (Photo: Katherine Martinelli)

"Tax receipts have changed, the rhythm of implementation of the milestones has changed. If we were not to change it, we would be signing off to an illusion that this will work. We have to see where we are in July and how we deal with it, that will be the new memorandum of understanding."

The memorandum - setting out deadlines and precise "milestones" for reforms, ranging from tax collection to labour markets and pension systems - was signed just three months ago when lenders agreed a €130 billion bail-out and a €100 billion debt reduction.

But inconclusive elections in May leading to new elections last weekend have delayed the adoption of budget cuts required - on paper - for lenders to disburse the next tranche of money.

Under the memorandum, Greece has to cut €11.5 billion from its state expenditure by 2014.

The winning parties in last Sunday's elections want this deadline extended to 2016.

According to the EU official, the International Monetary Fund (IMF) - a co-funder of the Greek bail-out - has experience of countries going "completely off track" and needing readjustments on their reform plans.

The source said that what matters is not to be fixated on one particular measure and its deadline, but to protect overall goals.

Talks with the new Greek government will be led by the European Commission, the IMF and European Central Bank (ECB) officials - the "troika."

The Eurogroup - eurozone finance ministers - will be "kept in the loop" in order not to go past what is politically acceptable to member states.

IMF chief Christine Lagarde will take part in the Eurogroup meeting on Thursday night, which is to be just the first in a series of upcoming discussions over the summer.

She is expected to insist that Greece reduces debt to 120 percent of GDP by 2020 and continues structural reforms.

"Structural reforms" might sound abstract. But the EU official said that if, for instance, it costs tens of thousands of euros to get a trucking licence in Greece, people fly in Dutch tomatoes instead of trucking Greek ones cross-country in a negative spiral for the economy.

For his part, Eurozone chairman Jean-Claude Juncker warned Greece that the extra leeway does not mean revisiting the whole programme.

His comments, on Austrian radio, came after talking on the phone to election winner and likely new leader Antonis Samaras.

Samaras is often called "pro-bail-out."

But his New Democracy party caused the financial mess in Greece in the first place.

His brinkmanship on EU bail-out talks last November saw commission chief Jose Manuel Barroso lose his temper and tell him to stop playing "political games."

Agenda

Troika back in Greece this WEEK

The troika of international lenders returns to Athens this week to take stock of delays in implementing the bailout-linked austerity measures. Meanwhile, the European Central Bank may take some crisis-alleviating measures on Thursday.

News in Brief

  1. EU to open trade talks with US on beef
  2. EU court orders Poland to suspend firing judges
  3. Japan to focus on circular economy at G20
  4. Italian budget 'significant deviation' from rules, says EU
  5. Podemos initiates debate on legalising marijuana in Spain
  6. Merkel: Focus on banking union at December EU summit
  7. Scotland confirms mad cow disease case
  8. European 'Green surge' set for repeat in Hessen election

Airbnb agrees to clarify pricing for EU

The justice commissioner says the accommodation-rental website will better inform users about prices, and about the legal status of their 'hosts'. Facebook, however, could face sanctions if it doesn't comply with EU rules.

Stakeholders' Highlights

  1. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  2. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  3. NORDIC COUNCIL OF MINISTERSState of the Nordic Region presented in Brussels
  4. NORDIC COUNCIL OF MINISTERSThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  5. NORDIC COUNCIL OF MINISTERSThe Nordic gender effect goes international
  6. NORDIC COUNCIL OF MINISTERSPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  7. NORDIC COUNCIL OF MINISTERSNordic design sets the stage at COP24, running a competition for sustainable chairs.
  8. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  9. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  10. International Partnership for Human RightsCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  11. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  12. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All

Latest News

  1. What Italy's budget row is actually about
  2. EU preparing 'concentration camps' for migrants
  3. Poland to respect EU injunction on judicial purge
  4. EU votes on Facebook and plastic This WEEK
  5. Top EU banks guilty of multi-billion tax fraud
  6. Polish left a glimmer of hope in fight against illiberal democracy
  7. Europe and Asia seek stable relations in troubled times
  8. Asylum reforms derailed, as EU looks to north Africa

Join EUobserver

Support quality EU news

Join us