Wednesday

17th Aug 2022

Third Greek bail-out not ruled out

  • (Photo: snorski)

Eurozone chief Jean-Claude Juncker and German finance minister Wolfgang Schauble have said they do not rule out the need for a third Greek bail-out.

Their words come ahead of a key vote in the German parliament, the Bundestag on Monday (27 February) to approve the just-agreed second aid programme.

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Asked in a TV interview by the Qatar-based Al Jazeera news agency on Saturday if he is sure Greece would not need a third package, Juncker replied: "You cannot really exclude that, although we should not have as a starting assumption that a third programme will be [needed]."

"We made it clear last Tuesday in Brussels that we are standing ready to support Greece even beyond the time period of this programme but I have good reasons to believe that we should now not engage ourselves in a debate on a 'maybe' third programme. We should now ... implement the second one," he added.

Juncker also dismissed fears that a Greek default is inevitable despite the freshly agreed €130 billion bail-out: "I do not see how Greece could go bankrupt."

His remarks came just one day after German finance minister Schauble in a widely-leaked note to MPs also suggested a third bail-out could be necessary.

"There is no guarantee that the route we have taken will lead to success and it is possibly not the last time that the Bundestag will have to consider financial assistance for Greece," he said.

For his part, a minister from Angela Merkel's sister party in Bavaria - the bail-out-sceptical Christian Social Union - suggested the eurozone should give Greece "an offer it can't refuse" so that it leaves the common currency.

"Outside European monetary union, Greece's chances of regenerating itself and becoming competitive are definitely better than if it remained inside the eurozone," interior minister Hans-Peter Friedrich told the Der Spiegel magazine.

Merkel is on Monday to deliver a speech in the Bundestag defending the bail-out ahead of the vote. At least 14 backbenchers in her coalition have signalled they will vote against it, but the bill is likely to pass because the opposition Socialist and Green parties are in favour.

"If Greece leaves the eurozone it will have a domino effect that will, among other things, end up costing us jobs here," Green leader Renate Kunast said in reference to Friedrich's remarks.

A poll by the mass-selling tabloid Bild on Sunday showed that over 60 percent of respondents oppose giving more money to Greece.

The same paper last week ran an editorial saying it is time for Greece to be kicked out of the eurozone because its population is not grateful enough for foreign aid.

The Greek government is trying to improve its image abroad with a new media campaign called "Greece is changing" which lists all the measures and latest economic data showing the sacrifices demanded from its people.

No movement on the firewall

Meanwhile, a meeting in Mexico City over the weekend of finance ministers from the 20 most industrialised countries in the world made little headway on whether the International Monetary Fund (IMF) should provide more aid to the eurozone.

Germany's Schauble said a decision on whether to increase the eurozone bail-out funds - a precondition for IMF participation in the Greek bail-out - will be taken "in the course of March."

His words suggest the stand-off between Berlin and the IMF will drag on beyond an EU summit on Thursday and Friday, where the issue was supposed to be resolved.

"Between March 1 and 31, we will again examine whether the volume of the mechanism is sufficient given recent developments," Schauble said.

EU leaders were to look at bolstering the €500bn bail-out funds for the eurozone to at least €750 billion, but Germany opposes the move.

The G20 ministers in Mexico said the eurozone must first boost its firewall before it gets more aid from abroad. "Euro area countries will reassess the strength of their support facilities in March. This will provide an essential input in our ongoing consideration to mobilize resources to the IMF," they said in a final statement after the meeting.

Greek bail-out threatened by Germany-IMF stand-off

Greece's second bail-out still faces hurdles as Germany and the International Monetary Fund are waiting for each other to move first on financial commitments related to the deal.

IMF: No money for Greece until Europe boosts its firewall

One of the many loose ends to the Greek bail-out agreed Tuesday is the lack of a firm commitment from the International Monetary Fund, pending a decision by eurozone leaders next week to merge the firepower of two bail-out funds.

Berlin still against boosting eurozone firewall

Germany has indicated it remains against boosting the eurozone's bail-out funds, despite it being the expected quid pro quo for the Berlin-pushed 'fiscal compact' - but its position may change after a key vote in the Bundestag end of February.

Eurozone 'expected' Greek downgrade

Standard & Poor's has downgraded Greece to "selective default" due to a bond swap operation aimed at slashing some €100 billion off national debt.

EU leaders meet on economy, Schengen and Serbia

EU leaders at a two-day EU summit on Thursday will look where each country stands in terms of public deficit, taxes and retirement ages. Schengen enlargement and Serbia are also on the agenda.

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