Government wary of Greek demands for debt deal

Prospect of further debt relief for Greece could prove highly sensitive for Ireland

Greek finance minister Euclid Tsakalotos is visiting European capitals to drum up support for further debt relief for Greece.  Photograph: Markku Ojala/EPA

Greek finance minister Euclid Tsakalotos is visiting European capitals to drum up support for further debt relief for Greece. Photograph: Markku Ojala/EPA

 

Greece has intensified its demands for further debt relief, in a move that is likely to prove highly uncomfortable for the Irish Government ahead of the general election.

Greek officials have in recent weeks met representatives of euro zone member states – including Irish officials in Brussels – to press the case for further debt relief as discussions on the Greek bailout gather pace.

Almost a year since Greek prime minister Alexis Tsipras swept to victory in general elections in Greece, bailout monitors are preparing to return to Athens next week for the first bailout review under the country’s third bailout programme.

Greece bowed to intense euro zone pressure last summer and signed up to an €86 billion bailout – its third since 2010 – despite fierce resistance by the ruling Syriza party. Under the bailout deal, euro zone lenders agreed to consider debt relief for Greece if certain reform measures were met.

As well as having talks in Brussels, Greek finance minister Euclid Tsakalotos has visited a number of national capitals in the past week to drum up support for debt relief.

Highly sensitive

The prospect of further debt relief for Greece is likely to prove highly sensitive for Ireland. A pledge by the European Council to consider special treatment for Ireland at an EU summit in June 2012 was hailed as a breakthrough by the Taoiseach, as Ireland sought to ease the cost of the Irish bank rescue. But since then little progress has been made on the question of recompensing Ireland for rescuing its banking system at the height of the euro zone crisis.

Countries such as Germany are also reluctant to revisit the possibility of further debt relief for Ireland given the country’s strong economic performance since exiting the bailout, and its status as Europe’s fastest-growing economy.

The Greek bailout is expected to dominate today’s euro group meeting of finance ministers in Brussels which will be attended by Minister of State for Finance Simon Harris, though no definitive decisions will be reached, according to officials.

Dublin is likely to strongly resist any possible leniency for Greece. While Mr Tsakalotos has visited a number of European capitals, including Berlin, Paris, Rome and Lisbon in recent days, it is understood no plans have been made to visit Dublin.

A deal to reduce Greece’s debt burden could include the option of cutting interest rates or linking debt repayments to economic growth.