BRUSSELS – The European Union has warned Greece that unless political leaders give written pledges that they will back agreed reforms, an EUR 8 billion loan payment won’t be given and the country will run out of money in about 20 days, Greek and euro-zone officials said Tuesday, according to Wall Street Journal. The impasse stems from the refusal of conservative New Democracy leader Antonis Samaras to sign the pledge, which he fears voters will see as giving up a promise to renegotiate Greece’s bailout loans if he comes to power.
“There is enough money for another 20 days,” a senior Greek government official said. “Without the loan tranche we will default on the EUR 2.8 billion bond payments in December and we won’t be able to pay out salaries and pensions. The situation is very serious and this issue has to be settled this week.”
An EU diplomat said Greek Prime Minister Lucas Papademos received a renewed warning in meetings with European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy in Brussels on Monday.
Papademos, who heads a coalition government supported by the former ruling socialist Pasok party, New Democracy and the small LAOS nationalist party, met Tuesday with Eurogroup President Jean Claude Juncker in Luxembourg. Juncker told reporters the written pledge should be submitted by the Nov. 29 Eurogroup summit. “I will have to chair a meeting of the Eurogroup a week from now on 29th of November. We will discuss the sixth disbursement and I am quite optimistic that we will be in a position from now to then to give a positive decision … We have asked to be given a letter of commitment by the new Greek prime minister … this view should be shared by the main political leaders,” Juncker said. Dutch Finance Minister Jan Kees de Jager also said future financial aid for Greece will be terminated if Samaras doesn’t support the reforms in writing.
Also yesterday, Italian PM Mario Monti was in Brussels to have a first meeting with barroso and Van Rompuy. On Thursday, he is due to join German Chancellor Angela Merkel and French President Nicholas Sarkozy in Strasbourg for what Monti has said will be a permanent club of the eurozone’s three largest economies to confront the debt crisis, according to BusinessWeek.