Monday

23rd Oct 2017

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.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

  • 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.

Macron puts trade policy on summit table

France's president wants a "political discussion" on EU trade policies at Thursday's summit, amid domestic concerns over Canada and South America deals. But his colleagues are likely to avoid a lengthy debate.

Stakeholders' Highlights

  1. Martens CentreI Say Europe, You Say...? Interview With Commission VP Jyrki Katainen
  2. Mission of China to the EUPresident Xi Jinping Proposes Stronger Global Security Governance at Interpol Assembly
  3. European Friends of ArmeniaEU Engagement Could Contribute to Lasting Peace in Nagorno-Karabakh
  4. UNICEFViolence in Myanmar Driving 12,000 Rohingya Refugee Children Into Bangladesh Every Week
  5. European Jewish CongressBulgaria Applauded for Adopting the Working Definition of Antisemitism
  6. EU2017EENorth Korea Leaves Europe No Choice, Says Estonian Foreign Minister Sven Mikser
  7. Mission of China to the EUZhang Ming Appointed New Ambassador of the Mission of China to the EU
  8. International Partnership for Human RightsEU Should Seek Concrete Commitments From Azerbaijan at Human Rights Dialogue
  9. European Jewish CongressEJC Calls for New Austrian Government to Exclude Extremist Freedom Party
  10. CES - Silicones EuropeIn Healthcare, Silicones Are the Frontrunner. And That's a Good Thing!
  11. EU2017EEEuropean Space Week 2017 in Tallinn from November 3-9. Register Now!
  12. European Entrepreneurs CEA-PMEMobiliseSME Exchange Programme Open Doors for 400 Companies Across Europe