Monday

20th May 2019

Grexit fears hang over Eurogroup meeting

  • Failure to find an agreement between Greece and its lenders could trigger 'a collapse of all the Greek economy has achieved' (Photo: Eric Maurice)

Greece and its creditors were preparing for a crucial Eurogroup meeting on Thursday (18 June) amid growing concerns of a Greek exit from the eurozone or even the EU.

The alarm was raised by a Bank of Greece report warning that the crisis could get out of control and "relegate" Greece "to the rank of a poor country in the European South" if no deal was reached before 30 June to lend €7.2 billion to Greece.

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

"Failure to reach an agreement would mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country's exit from the euro area and – most likely – from the European Union," Greece's central bank warned in its annual report on monetary policy.

"A manageable debt crisis, as the one that we are currently addressing with the help of our partners, would snowball into an uncontrollable crisis, with great risks for the banking system and financial stability."

The consequence would be "a collapse of all that the Greek economy has achieved over the years of its EU, and especially its euro area, membership"

The bank's governor is Yannis Stournaras, finance minister from 2012 to 2014 in Antonis Samaras' centre-right government.

"The central bank has been warning the Greek government for several months, explaining the consequences and the risks of the situation. It is more on the creditors' side than on the governement's side," an EU source told EUobserver.

"Stournaras is a good technician, while the government doesn't weigh all the consequences," the source said, adding that the bank's report "reflects the pessimism of the creditors".

"[He] has a seat at the European Central Bank's governing council. He is aware of the debates and he sends message."

The speaker of the Greek Parliament, Zoe Konstantopoulou, said the central bank's report was "unacceptable".

“Stournaras has contributed to the fiscal, memorandum-based policy. He now tries, in a non-democratic way, to prevent the ultimate debt write-off claims of the government,” she said.

Meanwhile, talks for an agreement were still stuck on Wednesday, with Greece and the institutions (the EU, European Central Bank and International Monetary Fund) waiting for the other side to present a new proposal.



The discussion between eurozone finance ministers at the Eurogroup could "be pretty short", said another EU official, adding that "many gaps remain between the institutions and the Greek authorities".

"Ministers will certainly conclude that the ball is in the Greek camp," the source said.

The divergences between Greece and its lenders are "not only a fiscal gap, it has very much to do also with the structure of the tax system and with pensions," the source explained.

This "has a fiscal impact in the short run and fiscal sustainability implications in the medium- and long-term which are much more important than people realise."

The IMF and ECB chiefs, Christine Lagarde and Mario Draghi, will participate in the meeting. But if no progress is made, an emergency summit of EU leaders could be organised during the weekend.

A regular EU summit will take on 25-26 June. But it would be very late by that time to draw up an agreement to be endorsed by all member states before 30 June, especially where a parliament vote is needed.



Whenever a deal is clinched, "a hell of a lot of work," will still have to be done, said the EU official.

Greece situation 'dramatic'

ECB chief Draghi has said "urgent action is needed" for a bailout deal, but Greek PM Tsipras says he's waiting for creditors' "realism".

News in Brief

  1. EU flies rainbow flag on anti-homophobia day
  2. EU to freeze money and visas of foreign cyber-attackers
  3. EU reassures US on arms sales
  4. Use euros over dollars in energy contracts, France says
  5. UK cross-party Brexit talks collapse
  6. Climate activists occupy German-Russian gas pipeline
  7. Farage got €515,000 of private perks
  8. French EU commissioner urges Italy not to overspend

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  2. Nordic Council of MinistersEducation gets refugees into work
  3. Counter BalanceSign the petition to help reform the EU’s Bank
  4. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  5. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  6. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  7. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  8. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  9. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  10. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  11. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  12. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic commitment to driving global gender equality
  2. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  3. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  4. Nordic Council of MinistersNordic talks on parental leave at the UN
  5. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  6. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  7. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  8. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  9. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  10. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  11. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  12. Nordic Council of MinistersNordic ministers take the lead in combatting climate change

Join EUobserver

Support quality EU news

Join us