Greek financial aid
July 2, 2011
Eurozone finance ministers have approved urgent financial aid to Greece after the Greek parliament last week passed tough austerity measures.
As was widely anticipated, the ministers signed off on the release of the 12-billion-euro ($17.5 billion) aid payment, the fifth tranche from a 110-billion-euro ($160 billion) bailout granted by the European Union and International Monetary Fund last year. Athens urgently needs the money by mid-July to stave off bankruptcy.
The EU is putting 8.7 billion euros towards the loan, with Germany the biggest contributor. The loan decision was taken during a video conference call.
Austerity package as precondition
The EU and the IMF had made it a precondition for the disbursement of the money that the parliament in Athens vote through the austerity package, which amounts to 78 billion euros ($113 billion).
German Foreign Minister Guido Westerwelle has defended the public spending cuts in comments in a Greek newspaper. Westerwelle told the paper To Vimas tis Kiriakis that "the remedy for the Greek economy [was] the stabilization of public finances via better tax revenues and reforms such as privatization."
Negotiations are now to be held on a new rescue package requested by Athens. This time, some countries, especially Germany, want private investors to be involved by agreeing to a voluntary rollover of Greek debt. Under the scheme they would buy new bonds to replace those maturing soon.
Private investors "ready" to help
A key global finance group, the Washington-based Institute of International Finance, has given its backing to the plan. The IIF said on Saturday that private investors were ready to take part in "a voluntary, cooperative, transparent and broad-based effort" to help Greece.
Diplomats say a decision on the size of the new bailout and on the participation of private investors could come at another meeting in Brussels on July 11, or up to two months later.
However, the main Greek opposition party says it will vote against a second bailout unless the government changes its current economic policy. It claims the unpopular austerity measures are harming an already damaged economy.
There have been widespread protests in Greece against the austerity measures, which many people there feel will leave the country impoverished.
Author: Timothy Jones (AFP, DPA, Reuters)
Editor: Andreas Illmer