Tag Archives: EUobserver

EU to Greece: No More Solidarity If You Vote No

On the eve of perhaps the most significant vote in the Greek parliament since the return of democracy to the country in 1974, the European Commission has warned Greek deputies that if they do not vote the right way, then “everything changes” as to whether “EU solidarity continues”.

“The only way to avoid immediate default is for parliament to endorse the revised economic programme.”

Olli Rehn

The Greek parliament opened debate on Tuesday on a draconian package of public spending cuts, structural reforms and a massive €50 billion sell-off of state assets imposed by international lenders. The Greek parliament is due to vote on the mid-term package on Wednesday and hold a second vote on its implementation on Thursday.

In a stern public statement issued the same day, EU economics commissioner Olli Rehn said there are only two options for the country: pass the mid-term package or default, the EUobserver.com reports.

“The only way to avoid immediate default is for parliament to endorse the revised economic programme,” he writes in a communique to reporters, read  by his spokesman, Amadeu Altafaj-Tardio.

“To those who speculate about other options, let me say this clearly: there is no Plan B to avoid default.”

In recent weeks, a range of commentators, including mainstream and heterodox economists have recommended a range of other paths out of the crisis than those on the table.

The EU executive however dismissed such ideas as unrealistic.

“According to press reports over the last hours, there seems to be an illusion that there will be other plans on our desk,” Altafaj-Tardio says.

“This should be clear in all journalists, politicians and markets’ minds.”

Pressed whether the commissioner’s words meant that if the vote is defeated, Greece will be allowed to go bankrupt, the spokesman said: “If Greece does everything to take the objectives set a year ago, then EU solidarity continues. If not, then of course everything changes.”

He refuse to answer whether a country can default and still be a member of the eurozone.

“We are not putting ourselves in a scenario without Greece at this point in time,” he says.

However, a euro zone source close to talks on the subject confirmed toEUobserver that there are indeed “half-formed” ideas about emergency measures to take in the event that the Greek parliament votes down the measures.

“It would be extremely irresponsible if there were no Plan B. There have been discussions on what to do, a contingency plan in the event that Greece doesn’t vote the right way,” the source says.

Ideas include a show of public support, possibly with the European Financial Stability Fund directly purchasing Greek government debt – an option that has until now been forbidden.

One idea would involve allowing Greece to miss a payment and the EFSF then swooping in and buying up debt at a significantly discounted rate, but with very strict conditions, according to the EUobserver.com.

Another possibility is that Greece could return to the private sector for funding, although such a move would entail borrowing at acutely high rates.

A market analyst speaking to this website also confirmed that in theory, there is nothing preventing Athens from selling debt to private creditors, at least for a short period.

“In the event of a failed vote, Greece could still make the repayments due in July and August by borrowing in the short-term money market, albeit at a very steep interest rate,” Sony Kapoor, the director of international economic think-tank Re-Define, says.

“This would buy two more months of negotiation time.”

In the same statement, the commissioner again told opposition forces to drop their resistance to the mid-term package and forge “the necessary political consensus”.

Read the full post at EUobserver.com.

Related by the EconoTwist’s:


Filed under International Econnomic Politics, National Economic Politics

EU to Greece: New Austerity Package or No Cash

EU finance minsters warns Greece that it must achieve “national unity” on its new austerity package and push through the measures or the latest tranche of bail-out cash will not be handed over.

“Given the length, magnitude and nature of required reforms in Greece, national unity is prerequisite for success.”

EU Officials

The EU economy chief says Monday that the sum of €12 billion will be disbursed to mid-July pending the latest EU-IMFECB assessment of the country’s compliance with already agreed austerity and structural adjustment and “the passing of key laws on the fiscal strategy and privatisation by the Greek parliament.”

Heading into the meeting, ministers expected an outline agreement to be achieved, and EU economics commissioner Olli Rehn said last week he expected consensus on the matter.

Instead ministers insisted that Greece deliver the goods before they could endorse a release of the cash, the EUobserver reports.

“Ministers call on all political parties in Greece to support the programme’s main objectives and key policy measures to ensure a rigorous and expeditious implementation,” they now say.

“Given the length, magnitude and nature of required reforms in Greece, national unity is prerequisite for success.”

According to an EU source, it was the IMF that held those in the room back.

The international institution needs “insurance” that Greece can finance itself for the next 12 months.

Neither the IMF nor other the euro zone ministers is happy with what Greece has delivered so far .

The first privatisation measures were supposed to have kicked off in the first quarter of the year, “but we’re still waiting on this,” the EU officials says.

“But the timing is all right. There is the vote of confidence in parliament tomorrow, so this is still in keeping with schedules that are out there.”

Another EU source is more frank: “They’ve effectively kicked it not into the long grass, but perhaps the medium-term grass. It’s a bit messy. They’ve pushed the deadline as late as it goes.”

“It’s classic crisis mis-management.”

The new Greek finance minister in his first international outing since being appointed last week in a cabinet reshuffle reportedly “just sat on his own while others did the talking.”

“He didn’t do that great a job,”  another EU source says.

No agreement was reached on the form a second bail-out of the country, expected to be in the region of €120 billion.

However, in something of a victory for Germany and the Netherlands, who have insisted on the significant participation of private bondholders in any second bail-out of the country in order to minimise the level of public cash on the line, language in the ministerial statement stressed the involvement of “both official and private sources,” the EUobserver points out.

At the same time, the statement underlining the “pursuit of voluntary private sector involvement”, meaning that this could not be imposed on creditors, can be read as support for worries from the ECB and France in particular that any hint of coercion will result in rating agencies assessing attempts at soft restructuring of Greek debt as a default instead.

However, the ministers say that they hope to define the “main parameters” of a second bail-out by early July.

Damn! another burning hot Greek summer…

See also: Eurogroup statement on Greece.


Filed under International Econnomic Politics, Laws and Regulations, National Economic Politics, Philosophy

Embassies Evacuated After Bomb Alert

The Danish and Finnish representations to the EU were evacuated by Belgian police on Monday morning, following a vague bomb threat, received by email during the night.

“It was just normal procedures, nothing spectacular.

Aulikki Repo

The email threat, which was “not very concrete” according to a Danish EU diplomat, “didn’t seem very serious, but we didn’t want to take any risks.”

“It was just normal procedures, nothing spectacular. We were told by police to leave the building, around half past eight, waited around for about two hours until they swept the premises and then were allowed back in,” says Aulikki Repo, a press officer with the Finnish representation.

Their building, which shares an interior courtyard and a garage with the Danish representation to the EU, was evacuated after Danish diplomats alerted Brussels police about an email received late Sunday night, the EUobserver reports.

The official also denied any links between the email and the start of a trial in Chicago on Monday, in which a Pakistani-born doctor, Tahawwur Rana is charged with helping another Pakistani-American, David Headley, with planning a bomb attack against the Danish newspaper Jyllands Posten.

The paper has become a target for radical Muslims after it published cartoons with the prophet Mohammed.

“The threat was not linked to anything specific happening today,” the Danish diplomat said.

Denmark will also chair the rotating EU presidency in the first half of 2012, but the email did not mention this either.

Some 100 people work in the Finnish representation and another 78 people in the Danish one. Many of them were however in another location – the EU council’s Justus Lipsius building where experts and diplomats from EU member states gather every day for technical meetings.

In addition, a foreign affairs council with the Danish and Finnish ministers is also taking place there on Monday, meaning that only administrative and junior level staff had to be evacuated in the morning.


Filed under Uncategorized