Saturday

27th Aug 2016

More pressure on Greece as EU finance ministers meet

  • The Greek funding saga appears to be going on without end (Photo: DimitraTzanos)

Finance ministers are meeting in Cyprus to put more pressure on Greece to implement promised budget cuts, so that bailout payments can resume in November.

The informal meeting of finance ministers taking place Friday and Saturday (14-15 September) in Nicosia was originally expected to be a "huge event", with Greece's troika report and a possible Spanish request for more financial assistance to be dealt with.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

None of that is now expected to happen. The troika of international lenders (European Commission, European Central Bank and International Monetary Fund) has just started its mission in Athens, where there is still no final agreement on the €11.5bn worth of spending cuts that had to be implemented by end of June.

The Greek programme is "massively off track" as one EU diplomat put it, and Greece will need more money this year than planned, but no member state, be it Germany, Netherlands or France want to hear about a third bailout.

Instead, what EU officials in Brussels expect is that the troika will "fudge" the report so that payments from the €130bn bailout can resume in November and possibly in bigger tranches this year to fill the billions-strong gap that has emerged amid worsened recession, fewer tax revenues and privatisations than expected.

"The bailout money is stretched over the next two years, until 2014, so they could pay more this year and less in the coming years, as long as there is no extra money involved, it's fine," one EU source told this website.

Der Spiegel reported on Monday that German Chancellor Angela Merkel is increasingly of the view that it is better that the troika not shed too close a light on the state of Greece's finances.

With general elections coming up in autumn 2013, Merkel cannot politically afford to have the idea of a third bailout be seriously discussed and would rather have the troika embellish the report and find a way to frontload payments this year to keep the country afloat.

But the Washington-based IMF is reluctant to sign off the plan. The only agreement that seems to emerge so far is to delay the troika report until after the 6 November, when President Barack Obama stands for re-election.

Spain and banking union

Meanwhile, ministers in Nicosia are likely to have a first look at the banking union plans unveiled by the EU commission putting the ECB in charge of supervising banks in the 17 euro countries. With central bank governors present at the meeting, they will discuss the practicalities of how to move from the current, national-based system to the new centralised one.

"It would be a disaster if we missed this transition, especially since we are still in an economic crisis," one EU diplomat told several journalists in Brussels on Wednesday.

As for Spain, with the ECB having announced a bond-buying scheme that could help lower its borrowing costs, market pressure has been alleviated for the moment. "We don't expect any request from Spain," another EU official said earlier this week.

EUobserver understands that France is still pressuring Spain to ask for financial aid, but the centre-right government of Mariano Rajoy is wary of filing a request in the absence of a firm commitment from Germany that it would approve it.

Merkel is wary of going to the Bundestag to ask it to endorse another Spanish programme, after the €100bn agreed in June for its banks.

News in Brief

  1. Hungary plans to reinforce border fence against migrants
  2. France's highest court suspends burkini ban
  3. Greeks paid €1bn more in taxes in June
  4. Greek minister denounces EU letter on former statistics chief
  5. Turks seeking asylum in Greece may cause diplomatic row
  6. Merkel becomes digital resident of Estonia
  7. Report: VW will compensate US dealers with €1bln
  8. EU mulls making Google pay news media for content

Stakeholders' Highlights

  1. GoogleBrussels - home of beer, fries, chocolate and Google’s Public Policy Team - follow @GoogleBrussels
  2. HuaweiSeeds for the Future Programme to Bring Students from 50 countries to China for Much-Needed ICT Training
  3. EFASpain is not a democratic state. EFA expresses its solidarity to Arnaldo Otegi and EH Bildu
  4. UNICEFBoko Haram Violence in Lake Chad Region Leaves Children Displaced and Trapped
  5. HuaweiMaking Cities Smarter and Safer
  6. GoogleHow Google Makes Connections More Secure For Users
  7. EGBAThe EU Court of Justice Confirms the Application of Proportionality in Assessing Gambling Laws
  8. World VisionThe EU and Member States Must Not Use Overseas Aid for Promoting EU Interests
  9. Dialogue PlatformInterview: "There is a witch hunt against the Gulen Movement in Turkey"
  10. ACCAACCA Calls for ‘Future Looking’ Integrated Reporting Culture With IIRC and IAAER
  11. EURidNominate Your Favourite .eu or .ею Website for the .EU Web Awards 2016 Today!
  12. Dialogue PlatformAn Interview on Gulen Movement & Recent Coup Attempt in Turkey