Brussels.- Prime-minister G. Papandreou expressed satisfaction at the final agreement text and mechanism for support of euro region member states fiscal and borrowing problems. Mr. Papandreou, in a press interview, described the outcome of the summit as a great success for both Greece and Europe adding that it would safeguard stability in the euro region.
The Greek Prime-minister expressed conviction that there would not be need for activation of the rescue mechanism provided by the agreement. Referring to the domestic front, he called all political forces to support changes promoted by the government aimed at social justice and development.
The plan offers Greece a financial safety net if it finds itself unable to borrow but also foresees the involvement of the Washington-based International Monetary Fund.
“Europe has taken a step forward… Europe and Greece will emerge stronger from this crisis,” Papandreou told reporters at the conclusion of the two-day summit in Brussels yesterday, describing the decision as “an indisputable success.”
Papandreou reiterated that Greece was “satisfied” with the plan, which sets out strict conditions requiring the approval of all eurozone members and which would only be used as a last resort. “We believe we will not need to use it,” the premier said, noting that his administration was committed to pushing through austerity measures heralded over the past few weeks. He reassured reporters that no additional measures would be introduced, remarking that the wage freezes, tax increases and cuts to civil servants’ benefits voted through the Greek Parliament earlier this month “were already enough.”
Papandreou said the agreement hammered out by the eurozone leaders basically provided the vital political support Athens had been requesting for several months. “It means that Greece is not alone in the face of speculators,” he said.
Papandreou admitted that a plan purely dependent on eurozone guarantees would have been better. “We would have preferred a completely European solution. We will make do with a European compromise,” he said.
The premier also welcomed a parallel decision by European Central Bank President Jean-Claude Trichet that allows Greek banks to continue accessing ECB funding by extending lower loan collateral rates into next year. “Greece has regained credibility, its banking sector is not threatened,” Papandreou said. “We have already seen positive reactions in the markets,” he said, referring to a drop in government bond spreads and an increase in share prices.
The reaction by the political opposition was less welcoming. “This is a time for reflection, not celebration,” Antonis Samaras, the leader of the conservative main opposition New Democracy said in a statement, saying his party has “serious reservations” about the eurozone plan. “So they want Greece to reach the point of bankruptcy before they help us?” the statement said. The Communist Party (KKE) predicted that the involvement of the IMF would oblige Greece to take more “measures that hurt the people.” “The participation of the IMF reveals the weakness of the EU,” a KKE statement said.
Merkel pleased but IMF says little
German Chancellor Angela Merkel, who played a decisive role in the structure of the deal to give financial assistance to Greece, yesterday hailed the agreement as the International Monetary Fund remained tight-lipped over the role that it could play in providing Greece with an emergency loan in the future.
“I think that it demonstrated Europe’s capability to handle things and at the same time did something for the stability of the euro and for solidarity with a country that is in difficulty,” Merkel said just a few hours after the agreement among eurozone members was made public.
“For us it is also important in the long term that the euro, which is such a success for peace and unity, remains stable. Yesterday was an important day for the euro,” the German leader added.
French President Nicolas Sarkozy had to concede ground to Merkel for an agreement to be reached as he did not want the Washington-based International Monetary Fund to be involved in the scheme.
“We had to reach a compromise to find a good and workable agreement,” Sarkozy said late on Thursday, revealing that two-thirds of the loans would be put up by eurozone countries. “We had to work hard to reach an agreement.”
European Commission President Jose Manuel Barroso said that he hoped the conclusion of an agreement would end speculation by investors on the possibility of Greece defaulting.
“I hope that financial markets will now act on fact and not on fiction,” he said yesterday.
The IMF, however, appeared unclear about the role that it would play in any eventual rescue package and issued a statement yesterday simply saying that it was monitoring the situation. “We are following developments closely,” the fund said.
Greece’s IMF borrowing quota is roughly 1 billion euros but according to rules adopted during the global financial crisis, it would be allowed to draw up to 10 times that amount.
Short-term Targets amid Positive Reactions
Outcome of EU’s Summit meeting in Brussels as well as ECB decision to back Greek bonds have sparked positive reactions. Prime-minister G. Papandreou underlined that it was a significant decision, though expressing conviction that there would not be need to activate it. He also warned markets not to play with Greece.
Among the next targets is the holding of an investors conference in Greece with the participation of Greeks of the diaspora and world businessmen. It should be noted that developments (EU-IMF deal) had a positive impact in markets as interest rates for Greece’s loans dropped and the euro recovered.
Petros Hristodoulou, head of Public Debt Management Agency, told the Financial Times that the Greek government intends to borrow 5 billion euros saying “We would like to return to the market within March”.
To refinance maturing debt, Greece needs 20 billion euros till the end of May. The government will most likely issue a 3 or 7 year bond in March to be followed in April by a bond of a similar size, a move that will test the country’s credibility says an article in Financial Times.
Germany aims to agree on the proposal at a cabinet meeting next week to be attended by French Finance Minister Christine Lagarde, and work it by mid-year into a draft law to protect taxpayers from bearing the costs of future bank rescues alone, German Finance Minister Wolfgang Schaeuble told Die Welt newspaper.
Germany and France as the US are setting their sights on a model , in case of financial crisis, to protect taxpayers from bearing alone the cost of future bank rescues..
In an interview with state radio NET 105.8, the Speaker of the House Philipos Petsalnikos said Angela Merkel did not act as leader of the stronger European economy but as a Chancellor focused on elections in Rinania and objections within her government.
Euro region member states unanimous decision is necessary to activate support mechanism, which means additional measures said ND leader A. Samaras. He added that IMF involvement undermines European institutions and signals further unfavourable terms for Greece.
In its announcement on Saturday, the GCP (KKE) says: “Uprising Now!” People must declare war on the war against them by the government, the EU and all the bourgeoisie political parties which will continue stronger after the EU Summit meeting. The general secretary of the GCP Aleka Papariga will give a press interview on the outcome of the EU Summit meeting, at 12:30, on Monday, March, 29.
We have achieved a truce without knowing its duration said LAOS.
“Greece remains bound by speculators and Greeks by anti-popular recession policy measures which will keep reducing their income” said SYN president, Alexis Tsipras.