Sunday

27th Nov 2022

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.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

  • 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.

ECB says more rate hikes to come

European Central Bank president Christine Lagarde said more rate hikes will come, but also admitted a recession will not lower inflation — leaving some economist question the logic of the policy.

News in Brief

  1. 'Pro-Kremlin group' in EU Parliament cyberattack
  2. Ukraine will decide on any peace talks, Borrell says
  3. Germany blocks sale of chip factory to Chinese subsidiary
  4. Strikes and protests over cost-of-living grip Greece, Belgium
  5. Liberal MEPs want Musk quizzed in parliament
  6. Bulgarian policeman shot dead at Turkish border
  7. 89 people allowed to disembark in Italy, aid group says
  8. UN chief tells world: Cooperate on climate or perish

Stakeholders' Highlights

  1. Nordic Council of MinistersCOP27: Food systems transformation for climate action
  2. Nordic Council of MinistersThe Nordic Region and the African Union urge the COP27 to talk about gender equality
  3. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  4. Friedrich Naumann Foundation European DialogueGender x Geopolitics: Shaping an Inclusive Foreign Security Policy for Europe
  5. Obama FoundationThe Obama Foundation Opens Applications for its Leaders Program in Europe
  6. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos

Latest News

  1. Sweden says 'no' to EU asylum relocation pledges
  2. The 'proof' problem with EU sanctions — and how to fix it
  3. The EU gas cap: will the bottle ever be 'uncorked'?
  4. Enough talk, only rights can eliminate patriarchal violence
  5. Swedish EU presidency: 'Ukraine, Ukraine, Ukraine'
  6. EU Commission to keep Hungary's EU funds in limbo
  7. 'No substance' price ceiling for gas leaves everyone disgruntled
  8. Paying consumers who save most energy could tame gas prices

Stakeholders' Highlights

  1. European Committee of the RegionsRe-Watch EURegions Week 2022
  2. UNESDA - Soft Drinks EuropeCall for EU action – SMEs in the beverage industry call for fairer access to recycled material
  3. Nordic Council of MinistersNordic prime ministers: “We will deepen co-operation on defence”
  4. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries
  5. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  6. European Centre for Press and Media FreedomEuropean Anti-SLAPP Conference 2022

Join EUobserver

Support quality EU news

Join us