Eurogroup divided over Athens’ ability to keep bailout pledges
Brussels – The chance of a new bailout for Greece was in the balance last night as sceptical managers of the euro wrangled over ways of withholding at least some of the 230 billion (NZ$362B) to hold Athens to pledges of fierce cuts.
The 17 finance ministers of the eurogroup conferred over the next steps towards the 230b package amid deepening doubt over Greece’s prospects of ever paying its remaining debt without being forced into bankruptcy.
Greece needs the aid to repay a 14 billion slice by March 20 or face default – a step no longer unthinkable for the distrustful states of the northern eurozone.
Proposals for keeping up pressure on Greece included splitting the rescue to separate an alreadyagreed swap of Greek debt held by private institutions, worth 100b, and the 130b of new funding. The package is unlikely to be settled until European Union leaders meet in Brussels on March 1.
In a desperate attempt to convince his country of its dire straits, Greek Finance Minister Evangelos Venizelos told President Karolos Papoulias: ‘‘There are many in the eurozone who do not want us any more. We do not have a choice between a pleasant or unpleasant option – but a choice that is between either unpleasant or even more unpleasant solutions.’’
Leading the hardline front, Germany’s Wolfgang Schauble said: ‘‘We can help Greece but we are not going to pour money into a bottomless pit.’’
All the lenders’ terms must be met before the latest bailout will be handed over. ‘‘I have doubts all conditions have been fulfilled.
‘‘When you look at the political discussions in Greece and the opinion polls, then you have to ask who will really guarantee . . . that Greece will stand by what we are now agreeing,’’ Schauble said.
Athens met one demand yester- day when political leaders gave pledges to carry out the plan for job cuts and welfare reform that were laid out by the EU and International Monetary Fund and approved by their Parliament amid riots in Athens on Monday.
The most important commitment came from Antonis Samaras, leader of the conservative New Democracy party, who is favourite to win power. ‘‘If New Democracy wins the next election in Greece, we will remain committed to the programme’s objectives, targets and key policies,’’ he said.
However, he said that the Greek economy, which has shrunk 16 per cent from its peak in 2008, must be jolted back into life, and he reserved the right to adapt details of the package.
Officials admitted differences between northerners in the eurogroup, including the Netherlands, Finland and Luxembourg, and the southerners, led by France, over a full-scale default by Athens. Pub- licly, Germany denied it was toying with the idea of letting Greece default. ‘‘I can say very clearly for the German Government that these rumours are wrong,’’ said a spokesman for Angela Merkel.
Powerful figures have made no secret of their views. Bosch chief executive Franz Fehrenbach, one of Germany’s most respected manufacturers and an adviser to Merkel, called Greece an unbearable burden.
‘‘This state with its phantom pensioners and rich people that do not pay taxes, a state without a functioning administration, has no place in the EU.’’
French Foreign Minister Alain Juppe said: ‘‘The bailout must be concluded because if Greece went bankrupt and left the eurozone, the chaos would be even worse for the Greek people and bad news for the eurozone.’’
The European Commission said a Greek default would be a disaster.