Greek bailout delayed again as talks cancelled

Wed, Feb 15, 2012, 00:00

THE PROTRACTED negotiation of the second Greek bailout hit yet another roadblock last night as euro zone finance ministers scrapped plans for a special meeting in Brussels this evening to sign off on the package.

The ministers will hold a teleconference instead but their president, Jean-Claude Juncker, who is Luxembourg’s premier, made it clear Greece has yet to fulfil key conditions to have the new rescue plan triggered.

Although the Greek parliament has endorsed the new austerity plan, Europe still awaits further cost-saving measures from Athens and pledges from Greek leaders to execute the rescue plan in full. The chief concern is the position of centre-right New Democracy leader Antonis Samaras who is reluctant to commit himself in advance of a general election in April which he is widely expected to win.

The ministers called the meeting last Thursday after they withheld approval for the bailout in the wake of the government’s drawn-out decision to back the austerity measures.

In anticipation of the talks, finance ministry officials from euro zone countries and the EU institutions met yesterday in Brussels to discuss the Greek situation.

“Following today’s euro group working group meeting, it has appeared that further technical work between Greece and the troika is needed in a number of areas, including the closure of the fiscal gap of €325 million in 2012 and the debt sustainability analysis,” Mr Juncker said.

“Furthermore, I did not yet receive the required political assurances from the leaders of the Greek coalition parties on the implementation of the programme.”

Not only must Greece meet these demands, but the government is also obliged as a condition for the second bailout to implement about nine “prior actions” outstanding from its first EU-IMF rescue.

The cancellation of the meeting follows numerous other delays but was nonetheless unexpected. The authorities are under pressure to complete the deal so a debt restructuring transaction can go ahead in time to avert an uncontrolled default next month.

European officials in Brussels said earlier yesterday they were working on the basis that the meeting would go ahead.

Still, the ministers are due in Brussels again next Monday evening for two days of scheduled talks on the financial crisis.

A couple of hours before the cancellation, negotiators for Greece’s private creditors said they were preparing to travel to Brussels from Washington.

At the European Parliament in Strasbourg, meanwhile, EU economics commissioner Olli Rehn said he expected the meeting to go ahead if Greece met all conditions laid down by the ministers.

“To my knowledge, we have the meeting of the euro group tomorrow,” Mr Rehn told reporters.

“And to my mind it is essential that we hold the meeting of the euro group tomorrow in order to finalise the package on the second programme for Greece once all the conditions have been met by the Greek government.”

Greek technocrat prime minister Lucas Papademos told his cabinet ministers they must work systematically to complete the actions outstanding from the first bailout.

“Without these prior actions the next specific steps for the approval of the programme from the IMF and the euro zone countries can’t be carried out,” he said.