Wednesday

5th Oct 2022

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.

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

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.

Exclusive

EU officials were warned of risk over issuing financial warning

The European watchdog for systemic economic risk last week warned of "severe" threats to financial stability — but internal notes show top-level officials expressed "strong concerns" over the "timing" of such a warning, fearing publication could further destabilise financial markets.

News in Brief

  1. Russia's stand-in EU ambassador reprimanded on Ukraine
  2. France warns over incoming eighth Covid wave
  3. EU adds Anguilla, Bahamas and Turks and Caicos to tax-haven blacklist
  4. Czechs warn joint-nationality citizens in Russia on mobilisation
  5. Greece to unveil proposal for capping EU gas prices
  6. Four dead, 29 missing, after dinghy found off Canary Islands
  7. Orbán: German €200bn shield is start of 'cannibalism in EU'
  8. Lithuania expels top Russian diplomat

Stakeholders' Highlights

  1. The European Association for Storage of EnergyRegister for the Energy Storage Global Conference, held in Brussels on 11-13 Oct.
  2. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos
  3. European Committee of the RegionsThe 20th edition of EURegionsWeek is ready to take off. Save your spot in Brussels.
  4. UNESDA - Soft Drinks EuropeCall for EU action – SMEs in the beverage industry call for fairer access to recycled material
  5. Nordic Council of MinistersNordic prime ministers: “We will deepen co-operation on defence”
  6. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries

Latest News

  1. EU debates new pandemic-type loans to deal with crisis
  2. MEPs condemn EU Commission 'leniency' on Hungary
  3. Czech EU presidency wants asylum pledges to be secret
  4. European navies must stay on Suez trade routes, EU diplomats warn
  5. Macron's 'European Political Community' — how could it work?
  6. EU adopts common charger law, forces iPhone redesign
  7. Last-minute legal changes to Bosnian election law stir controversy
  8. EU wants probe into alleged war crimes by Azerbaijan

Join EUobserver

Support quality EU news

Join us