Europe

Greece bailout: Eurozone ministers set tough conditions

  • 10 February 2012
  • From the section Europe

Eurozone finance ministers have made a series of demands for Greece to get a 130bn euro ($170bn; £110bn) bailout.

They said the Greek parliament would have to approve the terms of a package of cuts and reforms agreed with the EU and the International Monetary Fund.

In addition, Athens must find a further 325m euros in budget cuts by Wednesday, when Eurozone ministers meet again.

Greek unions had already called a 48-hour strike, beginning on Friday, in opposition to the austerity measures.

Greece cannot service its huge debt, and there are fears that a default could endanger Europe's financial stability and even lead to a break-up of the Eurozone.

On Thursday Greece's finance minister and his 16 Eurozone counterparts met in Brussels to consider EU plans for another 130bn euros in bailout funds.

But chairman of the meeting of Eurozone finance ministers, Luxembourg Prime Minister Jean-Claude Juncker, set out conditions Greece has to meet before receiving the aid.

He said the Greek parliament must by Sunday ratify the 130bn bailout package agreed by Greece and the "troika" of the European Commission, the European Central Bank and the IMF.

And in addition to the further 325m-euro spending cuts, Mr Juncker sought "strong political assurances from the leaders of the coalition parties on the implementation of the programme".

"These three elements," Mr Juncker said, "need to be in place before we can take decisions".

Toughening mood

The BBC's Chris Morris in Brussels says that given Greece's worsening economy, there is concern among European ministers that the overall plan - involving the new bailout as well as an agreement for private banks to write off a substantial chunk of Greek debt - still doesn't do enough to put the country on a sustainable path.

It is the second such bailout and the mood among Eurozone countries appears to be toughening on Greece, our correspondent adds.

While the official view is still that Greece must be saved, he says there is more and more talk on the margins that a Greek default would not be a disaster.

Greek Finance Minister Evangelos Venizelos, of the left-wing Pasok party, launched an attack on his conservative rival Antonis Samaras after attending the finance ministers' meeting.

Mr Venizelos said his European counterparts "took into consideration that [Mr] Samaras has still not signed" a letter committing to spending cuts and reforms.

"The (conservative) party must decide - if they want to stay in the eurozone, they have to say so clearly," Mr Venizelos said, AFP reports.

A plan agreed by the Greece's fragile ruling coalition earlier this week includes:

  • 15,000 public-sector job cuts
  • liberalisation of labour laws
  • lowering the minimum wage by 20% from 751 euros per month to 600 euros
  • negotiating a debt write-off with banks.

Reform of the pension system - a key demand of the EU, IMF and European Central Bank - proved to be a stumbling block.

The Greek government's latest austerity proposals have already prompted protests by unions

Talks broke up without an agreement, but officials later announced that a compromise had been reached. It was not clear how the 325m-euro savings would be made.

Greece is already feeling the effects of an earlier round of austerity, put in place as part of a deal to release funds from a previous bailout.

Those cuts triggered widespread unrest and violent protests.

Greece is deep in recession with unemployment rising above 20%.

Unions have already said they will go out on strike over the latest austerity plans, condemning them as "painful measures" that would create misery.

Meanwhile, US President Barack Obama has reaffirmed America's willingness to help stabilise the eurozone.

In a meeting with Italian Prime Minister Mario Monti, he also urged European countries to promote a strategy of growth.