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29th May 2022

EU in discord over extraordinary eurozone summit

  • Van Rompuy (c). An EU diplomat said: 'By announcing it, [he] only raised expectations without delivering' (Photo: consilium.europa.eu)

The EU's internal conflict over the terms of a second bailout for Greece continues unabated, with Germany at odds with France and EU officials over when to hold a special summit on the issue.

EU council President Herman Van Rompuy in a high stakes move had suggested EU leaders meet on Friday (15 July) to discuss Greece after talks by eurozone finance ministers on Monday failed to calm markets.

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With analysts watching every nuance of the EU's response to the crisis, there is fear an 'emergency' summit would make matters worse unless it had a concrete outcome.

On Wednesday, Germany let it be known it is against the snap meeting, with a government spokesperson saying: "There are no concrete plans for a special summit."

Its reluctance puts Berlin at odds with France, which wants to accelerate the Greek talks.

A French government spokeswoman the same day said: "France has always supported the holding of eurogroup meetings in case of need." She added: "There is a clear will ... to reach the most effective solution as quickly as possible."

EU monetary affairs commissioner Olli Rehn also wants a quick deal on the second bailout, estimating that the longer the political uncertainty goes on the more jittery the markets become.

For his part, Greek Prime Minister George Papandreou earlier this week in a public letter to the eurozone president, Luxembourg's Jean-Claude Juncker, said EU "indecisiveness and errors" are causing harm.

His concern materialised on Wednesday when ratings agency Fitch downgraded Greece's debt another three pegs into junk territory, citing "political uncertainty" around private sector involvement in the new support package.

Ireland and Portugal also recently suffered downgrades over the same question.

No private sector involvement?

Private sector involvement - insisted on by Germany - has been the main sticking point in the discussions on helping out Athens a second time.

Berlin received a boost on Wednesday when the IMF issued a report backing its position. But German newspaper Handelblatt on Thursday reported the German government no longer believes it will be able to get private bond holders to make a "substantial voluntary contribution" to the fresh Greek bailout.

The paper says that private sector involvement is unlikely to feature in the second bailout, meaning that there is now a €30 billion gap which needs to be filled.

While EU leaders are prepared to gather for summit with just "48 hours" notice, according to one EU diplomat, they are also aware of the perils of having a meeting without substance.

"There is no point in having a meeting that won't bring about a conclusion in a comprehensive sense to something that is not going to go away unless it is dealt with," Irish prime minister Enda Kenny said Wednesday. "If a council meeting is to be held on Friday, it must be one that will grasp the nettle and set out Europe's response to the contagion which is clearly causing anxiety and concern."

Some EU diplomats have now been talking about the possibility of summit next week.

Uncertainty over the timing of the event is in itself causing annoyance in Brussels. "By announcing it, Herman Van Rompuy only raised expectations without delivering," a senior EU diplomat said on the Council chief's communications strategy.

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