4th Jul 2022

Greek solution looks to eastern rescue plan from 2009

  • Vienna state opera (Photo: Wikipedia/Thomas Binderhofer)

Brussels is looking to deliver a rescue option to Greece similar to the 2009 solution to the eastern European banking crisis that followed the wider global economic downturn, it was revealed on Monday.

The European Union's top economy official, commissioner Olli Rehn, told the European Parliament that the EU and IMF are working on a plan akin to what he called the "Vienna initiative".

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"We are working on a Vienna-style initiative so banks and financial institutions would maintain exposure to Greece, and in that context we are also examining the feasibility of voluntary rescheduling or 'reprofiling' of Greek debt," the commissioner said.

Two years ago, Austria, home to banks with massive exposure in eastern Europe, warned of a banking "collapse" across the region that could snuff out the Alpine nation's banking system.

Part of the solution was a scheme under which western European banks rolled over their loans to their eastern equivalents. A similar operation could be co-ordinated for Athens, the commissioner said.

Such a roll-over, it is hoped, would go some way to solving Greece's immediate funding gap.

A solution to the current Greek impasse is to be settled at the next meeting of Eurogroup finance ministers on 20 June, he added, to be followed by endorsement at a summit of EU leaders three days later.

"Building on the agreed comprehensive consolidation package, discussions on financing modalities for Greece and its economic reforms and adjustments are now expected in the next few weeks, before the 20th of June," he said.

He and his Eurogroup chief colleague, Jean-Claude Juncker, speaking alongside him, again pressed Greek politicians to reach a political consensus on austerity and privatisation.

Juncker, for his part, said that the EU-IMF-ECB troika had forced opposing political parties to back the same positions on bail-outs in other countries and expected Greek factions to fall into line as well.

"In the case of countries with difficulties, it would be wise for the principle political forces of those countries to agree on the path to follow. That's what we did in Portugal. That's what happened in Ireland and that's what we would like to happen between the political parties in Greece."

He called on the various political parties to "sort themselves out".

"You do, after all, have to be concerned about your external image. I have a huge amount of sympathy for the Greek people but you can't really expect other people to help, other people to show solidarity if you can't sort yourselves out internally. This isn't a matter of party politics. It is about Greece."

Juncker also told MEPs that a Greek exit from the euro has never been discussed at any Eurogroup meeting.

In passing, the Luxembourgish prime minister mentioned that he had been the object of Greek death threats in the post.

"I receive lots of letters from Greeks, including death threats," he said.

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