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February 2, 2023

EU agrees fresh bailout for Greece

The European Council summit last week also called on all political parties in Athens to support the new austerity programme in order to receive financial assistance and avoid bankruptcy.

BRUSSELS – EU leaders last week agreed to a fresh bailout of Greece so long as it passes further stringent austerity measures. The further funding depends on the Greek parliament adopting a harsher five-year austerity programme this week. This would release EUR 12 billion in EU/IMF aid, from the current EUR 110 billion package, needed to avoid possible bankruptcy in the middle of July. A second bailout of Greece is needed to stave off potential funding problems further down the line. The European contribution to the second Greek rescue package will again be limited to eurozone countries, following strong lobbying by UK leader David Cameron, according to EUObserver.

As a counterpoint to the further cuts to spending, hugely unpopular with Greek citizens, EU leaders also agreed to unlock unused European funds to Greece. “The European Council calls on the national authorities to continue implementing with resolve the necessary adjustment efforts to put the country on a sustainable path,” they said in a late-night declaration on Thursday night.

“The euro area Heads of State or Government agree that required additional funding will be financed through both official and private sources. They endorse the approach decided by the Eurogroup on 20 June as regards the pursuit of voluntary private sector involvement in the form of informal and voluntary roll-overs of existing Greek debt at maturity for a substantial reduction of the required year-by-year funding within the programme while avoiding a selective default,” the conclusions of the summit read.

The Council also called on EU finance ministers to complete work on “outstanding elements to allow the necessary decisions to be taken by early July” and on all political parties in Greece to support the programme’s main objectives and key policy measures “to ensure a rigorous and expeditious implementation.”

“There will be a new programme for Greece, on which the Greek parliament will have to vote next week,” said Germany’s Chancellor Angela Merkel quoted by the BBC. The UK says it will not contribute. “In the case of Britain I sought assurances that Britain wouldn’t be pulled into a eurozone package for Greece, and I’ve received those assurances,” Cameron said.

Greek Prime Minister George Papandreou said his Socialist government was committed to pushing the austerity plans through parliament. The government is proposing additional spending cuts worth EUR 28 bln over five years.
European Council President Herman Van Rompuy said Brussels was also moving to make it easier for Greece to access EU development funds to help boost its economy. Earlier, Luxembourg Prime Minister Jean-Claude Juncker urged Athens to meet its commitments under the bail-out programme.

As for the bloc’s economic situation, the summit agreed that policies and measures taken by member states “constitute a good starting point for sustaining Europe’s recovery, for addressing fiscal challenges and for driving more ambitious reforms at national level.”

The Council’s conclusions also note the clear determination of all member states to do everything that is required to fully implement the Stability and Growth Pact, while eurozone leaders reiterated their commitment to do whatever is necessary to ensure the financial stability of the euro area as a whole.

Conditional membership for Croatia

At the summit, Croatia received the backing of EU member states to join the bloc by July 2013. Zagreb is expected to sign the accession treaty this autumn, before all other EU countries ratify the deal, Radio Free Europe said. The final accession chapters, including one on judicial reform, are likely to be concluded by the end of this month, but the United Kingdom and The Netherlands secured a deal in which Croatian reforms in this area will be closely monitored in the run-up to its accession.

“Croatia should continue its reform efforts with the same vigour, in particular as regards the judiciary and fundamental rights, so as to be able to assume fully the obligations of membership from the date of accession. Monitoring up to accession of these reform efforts will give the necessary assurance to Croatia and current Member States,” the Council said in the summit conclusions.

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