Monday

22nd May 2017

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.

Greece should get more time, France says

France is in favour of giving Greece more time to meet its bailout conditions. Meanwhile, German media says there are plans to increase the EU bailout fund to €2 trillion.

Portugal held up as symbol of EU recovery

Portugal to sail out of troubled waters after eight years of financial crisis, EU commission predicted, amid broad but "fragile" recovery in European economy.

Stakeholders' Highlights

  1. Dialogue Platform"The West Must Help Turkey Return to a Democratic Path" a Call by Fethullah Gulen
  2. ILGA-EuropeRainbow Europe 2017 Is Live - Which Countries Are Leading on LGBTI Equality?
  3. Centre Maurits CoppietersWhen You Invest in a Refugee Woman You Help the Whole Community
  4. Eurogroup for AnimalsECJ Ruling: Member States Given No Say on Wildlife Protection In Trade
  5. European Heart NetworkCall for Urgent Adoption of EU-Wide Nutrient Profiles for Nutrition & Health Claims
  6. Counter BalanceInvestment Plan for Europe More Climate Friendly but European Parliament Shows Little Ambition
  7. Mission of China to the EUPresident Xi: China's Belt and Road Initiative Benefits People Around the World
  8. Malta EU 2017EU Strengthens Control of the Acquisition and Possession of Firearms
  9. International Partnership for Human RightsThe Cost of Speaking Out: Human Rights Violations Committed in Belarus
  10. ACCABanishing Bias? Audit, Objectivity and the Value of Professional Scepticism
  11. Nordic Council of MinistersNew Oslo Climate Declaration Focuses on Rising Temperatures in the Arctic
  12. European Healthy Lifestyle AllianceAbdominal Obesity: A Causal Risk Factor for Cardiometabolic Diseases