Tuesday

26th Sep 2023

Juncker concedes IMF role possible in Greek bail-out

The possibility of a twin-track approach involving aid to Greece from both euro area governments and the International Monetary Fund appears to be gaining traction in Europe, with a key supporter of a eurozone-only solution conceding the international funding organisation may have a role to play.

Speaking in front of the the European Parliament's economy committee on Monday (22 March), euro area chief Jean-Claude Juncker said a number of member states increasingly favoured the idea.

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

  • Mr Juncker is a strong supporter of a eurozone-only solution (Photo: Council of the European Union)

"My personal view is that it's better to have a solution that does not have an IMF component because the euro area needs to be able to solve its own problems. But I think mixing the two instruments would not be a major scandal," said Mr Juncker, provided euro area governments provided "the lion's share" of any financial aid.

Any twin-track approach "must respect eurozone rules", he added.

Initially opposed to any IMF financing for debt-ridden Greece should it struggle to meet refinancing demands in the coming weeks, a number of key national capitals have recently warmed to the idea.

"In the case of such an emergency arising ... the financial assistance of the IMF is, for the chancellor and the government, definitely a point for discussion," German government spokesman Ulrich Wilhelm told a government news conference in Berlin on Monday.

Comments from Finland's finance minister and domestic constraints in the Netherlands suggest Helsinki and the Hague would also support an IMF financing role.

Mr Juncker indicated any euro area aid would probably take the form of a "bilateral system of co-ordinated aid", but that not all countries would contribute "because one or two members have precluded a eurozone approach", something he is "not very happy about".

Greek Prime Minister George Papandreou indicated last week he expected EU leaders to give a clear signal when they meet in Brussels on 25-26 March, but Mr Juncker said a decision this week was not "absolutely necessary".

Spain and others

As economists and politicians increasingly seek to explain the underlying causes of Greece's current difficulties, eurozone imbalances are coming in for increased scrutiny.

French finance minister Christine Lagarde recently said Germany's export-driven economic model, built on holding down labour costs, was "unsustainable". She suggested the government of Europe's largest economy should raise long-stagnant domestic consumption, helping weaker eurozone nations to boost exports and shore up their finances.

Mr Juncker told MEPs the issue of such disparities within the eurozone was not the main issue at the moment, but would have to be tackled at some point.

A paper published by Brussels-based think tank Bruegel on Monday draws attention to the subject however, pointing out that even countries that were "fiscally virtuous" before the financial crisis, such as Spain, are still suffering from market doubts and higher borrowing costs.

The paper's authors highlight Spain's problems as originating in a domestic credit boom, which caused wages to rise and and the country's competitiveness to subsequently fall.

"The EU has instruments to help address such problems and correct internal imbalances, but in the first decade of the euro it was too often assumed that threats to stability could come from budgetary indiscipline only," says the document.

Rather than striving for balanced eurozone current accounts, an idea that the report's authors describe as "absurd", a system of greater systematic monitoring of "wage and price developments" should be implemented in eurozone states, allowing for a greater monitoring role and "a tentative alert procedure" for the European Commission.

IEA says: Go green now, save €11 trillion later

The International Energy Agency finds that the clean energy investment needed to stay below 1.5 degrees Celsius warming saves $12 trillion [€11.3 trillion] in fuel expenditure — and creates double the amount of jobs lost in fossil fuel-related industries.

Latest News

  1. EU and US urge Azerbijan to allow aid access to Armenians
  2. EU warns of Russian 'mass manipulation' as elections loom
  3. Blocking minority of EU states risks derailing asylum overhaul
  4. Will Poles vote for the end of democracy?
  5. IEA says: Go green now, save €11 trillion later
  6. The failure of the Just Energy Transition Fund in South Africa
  7. EU and G7 tankers facilitating Russian oil exports, report finds
  8. EU trade chief in Beijing warns China of only 'two paths' forward

Stakeholders' Highlights

  1. International Medical Devices Regulators Forum (IMDRF)Join regulators, industry & healthcare experts at the 24th IMDRF session, September 25-26, Berlin. Register by 20 Sept to join in person or online.
  2. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  3. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA
  4. International Medical Devices Regulators Forum (IMDRF)Join regulators & industry experts at the 24th IMDRF session- Berlin September 25-26. Register early for discounted hotel rates
  5. Nordic Council of MinistersGlobal interest in the new Nordic Nutrition Recommendations – here are the speakers for the launch
  6. Nordic Council of Ministers20 June: Launch of the new Nordic Nutrition Recommendations

Stakeholders' Highlights

  1. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  2. ICLEISeven actionable measures to make food procurement in Europe more sustainable
  3. World BankWorld Bank Report Highlights Role of Human Development for a Successful Green Transition in Europe
  4. Nordic Council of MinistersNordic summit to step up the fight against food loss and waste
  5. Nordic Council of MinistersThink-tank: Strengthen co-operation around tech giants’ influence in the Nordics
  6. EFBWWEFBWW calls for the EC to stop exploitation in subcontracting chains

Join EUobserver

Support quality EU news

Join us