Euro finance chiefs want to release billions for athens

euro finance chiefs want to release billions for athens

Details were still being negotiated over the weekend, as EU diplomats reported. However, there was growing confidence that the package would be adopted. Greece had previously fulfilled essential conditions of the euro countries. This included the approval of the parliament and the heads of the major parties to the savings targets as well as additional savings cuts of 325 million euros. At a special meeting on saturday, the athens government passed a series of bills to implement the austerity measures demanded by the EU. This will cut higher pensions and lower minimum wages.

The aid package is also a prerequisite for the debt cut with private creditors such as banks and insurance companies. Athens’ debt to fall by around 100 billion euros as a result.

Athens must submit to stricter controls in return for billions in new loans. According to reports, athens has accepted a key german demand. On monday, the finance ministers are expected to decide to set up a blocked account for the repayment of loans.

A portion of the government’s revenue is to be used for interest and repayment of the new loans – and which athens can no longer use for other expenditures. In doing so, the government is effectively surrendering part of its budgetary sovereignty.

German finance minister wolfgang schauble (CDU) stressed that there was agreement in the euro group that there would be such a special account. "The account ensures a priority for debt reduction," he told the "tagespiegel" (sunday). Further surveillance measures were discussed, it was said in brussels.

But the idea of a savings commissioner to monitor compliance with the decisions seems to be off the table. "There will be no discussion of this," said greece’s head of government lucas papademos. Mechanisms are already in place to monitor the savings commitments.

There is already an agreement in principle on the debt cut. However, the actual effect remains to be seen because it is not clear how many creditors will actually participate in the debt waiver. If not enough of them cooperate, it is likely that athens could force these creditors to do so by law via a supplementary amendment of the bond conditions.

To ensure that the central banks and the european central bank (ECB) – which hold billions in greek bonds – are not affected by the forced debt relief, they are exchanging their holdings of greek bonds for new securities with different identification numbers.

However, there are still doubts as to whether the aid measures for athens will be sufficient. Behind the scenes, the euro treasurers will also discuss additional debt reductions to help greece reach a sustainable debt level.

For example, the interest margin for the repayments from the first aid package for athens could be reduced. In may 2010, the eurozone countries and the international monetary fund (IMF) had already saved greece from bankruptcy with loans of 110 billion euros.

Schauble appealed to the greek government to accept offers of help. "We have been ready for some time to help the greeks with tax officials to build up a more efficient tax administration. The offer is still not being used today," said schauble. To the "tagesspiegel".

The "welt am sonntag" wrote, citing an internal working paper of the federal ministry of economics: "a preliminary balance of the german support offer turns out to be sobering". The paper gives examples: talks on the establishment of a demand bank along the lines of the german k have been slow. The experts therefore demanded that the EU commission include improved cooperation with the EU task force "in the list of requirements for the second aid package for greece."

Thousands of greeks protested again against austerity measures. On sunday, according to radio reports, some 3,000 people responded to a call by trade unions for a rally in the center of the capital. "The austerity decisions mean a provocation for the workers, the unemployed and the pensioners," stressed the president of the greek trade union federation, jannis panagopoulos. "Wages and pensions are being cut, workers’ rights are being curtailed, and collective bargaining agreements and the constitution are being violated."

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