Cause and Effect in European Politics and Law

The European Council called for national unity in Greece

Ralitsa Kovacheva, June 24, 2011

The European leaders have urged the Greek Parliament to adopt „as a matter of urgency” the reform package, as well as the key laws on fiscal strategy and privatisation agreed with the EU, the ECB and IMF. Avoiding the word “condition”, the European Council's conclusions state that “this will provide the basis for setting up the main parameters of a new programme jointly supported by its euro area partners and the IMF, in line with current practices, and at the same time for allowing disbursement in time to meet Greece's financing needs in July”.

As expected, the conclusions cited the main points of the Eurogroup statement from 20 June: “the required additional funding will be financed through both official and private sources and welcome the pursuit of voluntary private sector involvement in the form of informal and voluntary roll-overs of existing Greek debt at maturity for a substantial reduction of the required year-by-year funding within the programme, while avoiding a selective default for Greece.” According to sources from the Council, discussions and negotiations with Greek private creditors are already ongoing.

The EU leaders welcomed the proposal of Commission President Jose Manuel Barroso, EU structural funds to be used in support of Greece, as euinside already reported. Greece has a great need for technical assistance, because it suffers from a lack of administrative capacity to absorb EU funds - out of the 20 billion euros, allocated to Greece in the current financial period, (2007-2013) the country has utilised only a quarter. The indicators are comparable to those of Bulgaria and Romania, but they have joined the EU soon, a Commission official explained. According to Commission President Jose Manuel Barroso, without amending the current legislation, EU funding may be increased from 80 to 85%.

The next crucial points in solving the Greek crisis are the parliamentary vote in Athens on the economic programme next week and then - the meeting of eurozone finance ministers on July 3rd.

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