The European Union has predictably once again come to Greece’s rescue, demonstrating that its declarations about a solid European community of nations weren’t just words. What with its many problems, Greece isn’t left alone to cope with them. The eurozone countries are there to lend a helping hand. This attitude could serve as a good example for Ukraine, considering that this country also has a number of problems to be solved, including the possibility of default.
Eurozone finance ministers met in Brussels early Tuesday and, after 14 hours of hard talks, approved a 171 billion dollars bailout package for Greece. Early next morning the Eurogroup’s President, Jean-Claude Juncker, announced: “We have reached a far-reaching agreement on Greece’s new program and private-sector involvement,” adding that the private sector would be heavily involved.
This bailout package is the largest one in recorded history. It amounts to more than €230 billion, including €130 billion worth of loans and the writing off of Greece’s debts to private creditors. Prior to this statement, the private creditors and investors agreed to lower Greece’s debts to 53.5 percent in terms of bonds, in the process of restructuring these debts (previously it was 50 percent). In the end, Athens will have its sovereign debt minus €100 billion.
IMF Managing Director Christine Lagarde stressed that the objective of the bailout program was to bring down Greece’s public debt to 120.5 percent of its GDP before 2020, saying that this deal meant considerable progress made overnight; that Greece would have enough room for proving its competitiveness, and that it would bring the matter to the IMF board during the second week of March.
Analysts believe the bailout deal will help Greece meet its immediate financial requirements, but that this won’t help this country much.
Guy Verhofstadt, ex-Prime Minister of Belgium, currently the leader of the Group of Alliance of Liberals and Democrats of Europe, said the bailout package will simply allow Athens some breathing space. “And the second bailout also assumes that Greek politicians will remain committed to their reform pledges. The eurozone’s finance ministers have so little faith in the Greek government’s ability to reform that they have adopted special measures to force its hand. The eurozone will keep a permanent mission in Athens to monitor the reform effort, and the government will be required to deposit debt payments in advance into a special account before it can use funds for its own budget. In other words, Greece is being treated like an incompetent child by the rest of Europe.” (http://business.time.com)
The Day asked Oleh IVANIV, head of Makridakis’s liabilities department, for comment.
How does Greece feel about the European Union’s decision on the second bailout package?
“This decision was expected in Greece and the people feel satisfied with this aid, although I don’t think it will have a positive effect on the Greek economy. Greece is keeping its 3-4-year-old rate. I can’t expect their mentality or legislation to change at this stage. Some are dissatisfied, while most [in Greece] were sure Europe would come to their rescue and write off a large part of Greece’s sovereign debt.”
Does the Greek in the street know every clause of this deal, about the presence of a permanent mission that will watch every step taken by Athens in the direction of the required reforms, in order to overcome the crisis?
“Many in Greece – particularly businessmen – believe that there was a default plan in the making, a plot aimed at helping certain Greek moneybags transfer their money abroad.
“Reforms? They boil down to higher-level stuff reductions. No progress there. I’ve met with many tax and insurance officials. I can see no progress; I can’t see any real enthusiasm like in Germany or Spain.”
There are media reports about Antonis Samaras, the leader of the New Democratic Party, as the next prime minister of Greece after the April elections. The man says he will revise the new bailout package. Does he mean business?
“No, he doesn’t. He will be unable to revise it because the deal is in legal terms that preclude the possibility of its being revised by another administration.”
Even now media in the West claim the second aid package won’t be enough for Greece, that a third package will have to be worked out. Any comment?
“It’s hard to say. I don’t think that Greece will need another such package in the next two to three years.”
