Friday

6th Aug 2021

Euro states set to agree second loan for Greece

  • Greek protests were carrying on on Thursday as the euro-leaders met (Photo: EUobserver)

Eurozone leaders look set to greenlight a new loan for Greece as well as establish what will effectively be a European Monetary Fund, according to draft conclusions circulating on Thursday afternoon (21 July).

With the meeting closely watched around the world, the 17 leaders need to take major steps not just to help debt-ridden Greece but also to draw a line under the eurozone crisis which has in recent days been threatening to engulf Italy and Spain, the single currency's third and fourth largest economies.

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

"We agree to support a new programme for Greece and to provide an additional amount of up to € [xx]," say the draft conclusions.

Athens received a €110bn EU-IMF bailout last year but it quickly became apparent that it was going to need a second loan in order to meet its repayment obligations further down the line.

The eurozone pre-agreement also suggests bailout loans for Greece from the European Financial Stability Facility (EFSF), the eurozone rescue fund, are extended from seven years to 15.

New loans will also be given at the lower rate of 3.5 percent.

The document also suggests profound changes to the rescue fund making it more flexible by allowing it to intervene earlier, before a country gets into deep trouble, something the International Monetary Fund does.

"We agree to increase the flexibility of the EFSF, allowing it to intervene on the basis of a precautionary programme, with adequate conditionality."

The draft also says the €440bn fund should be able to recapitalise banks, including banks in those countries that are not subject to an EU bailout. This is particularly important to countries such as Austria or France whose banks have a large exposure in Greece.

Private sector involvement, something pushed for strongly by Germany, the Netherlands and Finland, will be on a "voluntary basis", says the paper without going into detail, with BNP Paribas and Deutsche Bank representatives attending the emergency summit. The paper refers only to "financial sector" involvement.

The conclusions also call for a comprehensive "strategy for growth and investment" in Greece, although text referring to a 'Marshall Plan' for the debt-ridden southern Mediterranean country is set to be removed after Austria complained that it sounded like "starving children", an EU diplomat explained.

The term also did not sit well as the Marshall aid from the US to Europe after World War II was money given to help post-war economic recovery. The money for Greece is in the form of a loan with an interest rate.

Ratings agency says EU bailout deal at risk

Ratings agency Moody's has warned the EU's new bailout package for Greece could unravel over demands for loan collaterals. EU anti-crisis measures are also facing fresh political risks in Germany and Italy.

Eurozone countries hold series of crucial votes

A swathe of European parliaments are this week due to decide on the strengthened temporary bailout fund, the EFSF, but the eurozone debate is moving faster than the political process.

Italy seeks EU help on migrant boat arrivals

Italy's interior minister Luciana Lamorgese has requested the EU convene an home affairs ministerial to discuss migrant and refugee arrivals - as NGOs seek to disembark over 800 rescued people.

Romania selling on its jabs, despite low vaccination rates

Europe's least-vaccinated countries are in no short supply of Covid-19 jabs - and yet Romania and Bulgaria are both looking for opportunities to sell or donate their excess vaccines which they are not able to administer to their own population.

Opinion

Cyprus' Varosha is Erdogan's canary in the coalmine

Last month, president Ersin Tatar of the Turkish Republic of Northern Cyprus, unrecognised outside of Turkey, announced the second phase of reopening the derelict tourist district of Varosha in the city of Famagusta.

News in Brief

  1. EU secures deal with Novavax for potential Covid-19 vaccine
  2. France fined €10m for failing to tackle air pollution
  3. Fire near Athens forces thousands to evacuate
  4. EU to Lebanon: 'deliver results' on Beirut blast probe
  5. Belarus opposition leader demands regime end
  6. Croatia's border-monitoring of migrant rights 'falls short'
  7. Court stops Austria's Afghan deportation, as conflict worsens
  8. 'Missing' Belarus exiles group chief found dead in Kyiv

Column

Burkinis and 'soul caps' - policing Olympic women back in fashion

There are no fixed rules. Anyone can criticise, condone and codify women's apparel. The game is inclusive, bringing together an assorted collection of voyeurs, misogynists, racists, bigots, religious fanatics and culture warriors – but also feminists and other equality campaigners.

Stakeholders' Highlights

  1. Nordic Council of MinistersNineteen demands by Nordic young people to save biodiversity
  2. Nordic Council of MinistersSustainable public procurement is an effective way to achieve global goals
  3. Nordic Council of MinistersNordic Council enters into formal relations with European Parliament
  4. Nordic Council of MinistersWomen more active in violent extremist circles than first assumed
  5. Nordic Council of MinistersDigitalisation can help us pick up the green pace
  6. Nordic Council of MinistersCOVID19 is a wake-up call in the fight against antibiotic resistance

Latest News

  1. Italy seeks EU help on migrant boat arrivals
  2. WHO calls for vaccine-booster pause to help poor countries
  3. Romania selling on its jabs, despite low vaccination rates
  4. Cyprus' Varosha is Erdogan's canary in the coalmine
  5. Europe sees drop in Covid-19 cases
  6. Burkinis and 'soul caps' - policing Olympic women back in fashion
  7. Telegram groups lure migrant hopefuls to Lithuania
  8. Third-time lucky for one Syrian grandmother in Denmark

Join EUobserver

Support quality EU news

Join us