Sacrifices won’t be only Greek but also European. In order to avert Athens’ default the Eurogroup of eurozone finance ministers, with the support of IMF and ECB agreed on a second bailout package for Greece on the night of February 20-21 amounting to a long-awaited 130 billion bailout, which adds up to an initial 110-billion-euro EU-IMF rescue approved in the framework of a financial crisis affecting the EU as a whole, and notably Greece. Community Europe and its Member States do their share, Greek citizens will have to cope with heavy social costs, while credit banks and European investors will have to give up the sums invested in Greek securities.
Bailout and discipline. “The Eurogroup welcomes the agreement reached with the Greek government on a policy package that constitutes the basis for the successor programme”. These are the opening lines of the statement released by the Eurogroup stipulating the new bailout package for Greece. 17 eurozone countries, along with the International Monetary Fund (expected to detail its intervention in March) and the European Central Bank, have agreed on a 130 billion loan to prevent the country’s default by March 20, when Greece faces a 14.5-billion-euro bond repayment. “The agreement - said Jean-Claude Juncker, chairman of the Eurogroup - secures Greece's future in the eurozone giving it the time to return on a path of sustainable growth”. At the same time the eurogroup finance ministers decided a permanent Troika presence in Athens in order to cut the country's debt to 120.5 percent of GDP by 2020, lowering the interest rates of initial EU states’ loans to Greece along with further sacrifices for the holders of Greek debt (nominal value reduction).
Respecting commitments. Premier Lucas Papademos said he is “very happy” with the massive bailout agreement and acknowledged that “full delivery of the deal” depends on Greece implementing the cuts and reforms demanded by the EU. “I'm convinced that the government that will take office after the general election” in April will also be committed to implement the programme fully, because it is in the interests of the Greek people”. The deal was welcomed also by other eurozone countries, although some Member States, notably The Netherlands and Finland, conveyed hesitation regarding this further step, fearing they would have to pay a dear price, and not trusting Athens as regards the respect of established regulations. EU Commissioner for Monetary Affairs Olli Rehn said: “Eurozone Countries have decided to participate in the second bailout for Greece, lowering the interest rates on the loans granted to the country”, thus underlining the availability and responsibility shown towards Athens. All finance ministers agree that the costs of Greece’s default would have been unpredictable, with the risk of dangerous repercussions on the single currency and on Community integration.
The next items on the EU’s agenda. The Meeting of Economic and Financial Affairs Council (ECOFIN, also held on February 21) thus gained center stage. The financial and economic situation is scheduled for debate on February 23, when Mr. Rehn will release the Interim Economic Forecasts, and on March 1-2, during the European Council. On the same front, EU Council President Herman Van Rompuy and EU Commission President José Manuel Barroso were submitted a document ratified by 12 member States (except Germany and France) requesting urgent measures to boost growth and competitiveness. The initiative – whose signatories include the governments of the UK, Poland, Italy, Spain, The Netherlands, Czech Republic, Sweden – intends to concretize the commitments taken by the European Council of January 30, notably, the final statement on growth and employment.
Eight proposals for growth. “The crisis we are facing is also a crisis in growth”, states the letter submitted to EU institutions. Follow eight operative proposals, that have no specific budgetary burdens, aimed at boosting Europe’s economic growth. The proposals are: completing and developing the single market; a single digital market; energy policy; creating a European research area; international trade agreements; reducing the EU’s administrative burdens on enterprises; labour market reform (to create jobs, notably for the young, women and elderly workers); creating a strong dynamic, and competitive financial sector. The document, which, according to its promoters, complies with Germany’s and France’s guidelines for economic recovery, should be understood as a contribution to the debate for the EU Council in March.