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21st Feb 2024

EU sides with embattled Greek PM in bailout talks

  • Moscovici: "The contingency mechanism is not really justified by data, but politically necessary" (Photo: European Commission)

The European Commission has sided with Athens on the prickly issue of pre-voting detailed reforms in return for its next chunk of bailout money.

Finance commissioner Pierre Moscovici told reporters in Brussels on Thursday (28 April) that creditors must respect Greek law, which forbids legislating up front on future developments.

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  • Bailout delays have prompted calls for Tsipras' resignation (Photo: Consillium)

“It is not necessary to have a precise and detailed set of measures but a mechanism that shows precisely how such measures will be taken if this is judged necessary,” he said.

“We are 99 percent there on the first package. As for the contingency mechanism, which, in our view, is not really justified by data, but politically necessary, let’s work on that.”

The “first package” refers to budget cuts worth 3 percent of Greek GDP. They are likely to come from public salaries and from welfare, which make up 83 percent of basic spending.

The “contingency” measures refer to demands by the International Monetary Fund (IMF) that Greek MPs pass laws now to cut a further €3.6 billion in future if its economy does less well than expected by 2018.

Moscovici said the EU “want[s] the IMF” on board. But he added: “It is certainly difficult for any parliament or government to legislate up front for eventual measures to be taken three years from now.”

He said the deal should “on no account wait until July” - when Greece needs bailout money to repay debts - because “further delay would be bad for the Greek economy.”

Eurozone finance ministers will next meet on 9 May to try to conclude talks.

Further delay could also be harmful for the government of Greek prime minister Alexis Tsipras.

The opposition New Democracy and Pasok parties are calling for Tsipras to resign. Pasok, the centre-left party, on Thursday said the government’s handling of the bailout talks is a “circus” and that snap elections would “avoid the abyss to which they are leading the country.”

The refugee crisis is adding to pressure on Tsipras.

Official figures said almost 54,000 people are stuck on Greek islands and near the Macedonia border after Austria and Western Balkan states stopped letting migrants through.

Residents on the island of Chios, which hosts 2,000 refugees, on Thursday set up roadblocks in protest.

Tsipras had also promised to move refugees from the port of Chios by Easter. But almost 3,000 people are still there.

’Matter of days'

The Greek central bank governor, Yannis Stournaras, voiced optimism on the bailout on Thursday, saying: “We're very close to an agreement, it's a matter of days.”

The so called quartet, the group of officials representing creditor institutions, said: “Greek authorities have made important progress.”

It said that a deal could unlock “discussions on debt sustainability” - measures to reduce the cost of Greece’s debt pile.

The US ambassador to Greece, David Pearce, said he “support[s] the IMF’s call for Greeks to carry out structural reforms.”

“We have stated repeatedly that Greece needs significant debt relief and must continue structural reforms that will return Greece to growth,” he said.

Lenders press Greece to adopt conditional laws

New talks will take place on measures to be triggered if Greek finances are not good enough, in parallel with discussions on a review of Greek reforms and, for the first time, debt relief.

France's Le Maire 'goes German' with austerity budget

The French government announced €10bn in further spending cuts. However, defence spending is set to increase significantly, up to €413bn from €295bn, while €400m was cut from a fund meant for renovating schools, carpooling infrastructure, and other environmental projects.

France's Le Maire 'goes German' with austerity budget

The French government announced €10bn in further spending cuts. However, defence spending is set to increase significantly, up to €413bn from €295bn, while €400m was cut from a fund meant for renovating schools, carpooling infrastructure, and other environmental projects.

Opinion

The elephant in the room at this weekend's African Union summit

Italy's offer to mobilise €5.5bn over the next years, overwhelmingly in already-allocated loans and guarantees, pales in comparison to the financing challenges faced by Africa. Only an EU-wide coordinated financial offer can credibly respond to African needs.

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