The Good, the Bad and the Ugly for Greece
Adelina Marini, February 16, 2012
The growing tensions around Greece whether the country will receive the second bailout or not inflamed passions in the European Parliament on Wednesday morning during the regular plenary session of parliament in Strasbourg. Then, according to the schedule, three reports had to be debated related to the Annual Growth Survey 2012 (AGS2012), presented by the European Commission in end-November. Before the debates about growth however, the MEPs had to listen to the programme of the Danish Presidency for the Spring European Council on March 1-2, as well as the visions of the European Commission. As in none of the two statements Greece was mentioned, this infuriated the MEPs. The debate on Greece continued more than an hour and forced a change of parliament's schedule.
The big eruption was provoked by another dose of suspense in the Greek drama after it was announced that the planned for Wednesday evening meeting of the Eurogroup, during which it was expected green light to be given to the second bailout loan worth 130 bn euros, would not take place. Last week the finance ministers meeting ended with no agreement and with three conditions, which the Greek political parties and government had to fulfil by Wednesday (Feb 15). These were the government to find out where to cut additionally 325 mn euros from the budget this year; the political parties to provide written guarantees that the reforms programme, accompanying the loan, would be implemented even after the parliamentary elections, expected in April; the programme itself to be approved by the national assembly of Greece, which happened on Sunday with the leaving of deputies from almost all political parties.
What was missing up to the meeting of the Eurogroup working group were precisely the political guarantees. This is why the Eurogroup chief, Jean-Claude Juncker, reduced the meeting to a conference phone call after which a brief statement was released. In it Mr Juncker points out that a significant progress is achieved and strong assurances are provided on behalf of the leaders of the two coalition parties in the Greek government. Besides, the analysis of the Greek debt sustainability is also completed, which was also a pre-condition for the meeting to take place. From the statement it becomes clear it had been identified where to cut the 325 million euros from, but "further considerations are necessary regarding the specific mechanisms to strengthen the surveillance of programme implementation and to ensure that priority is given to debt servicing".
This is a key sentence in the otherwise brief statement of Jean-Claude Juncker's, which ends with a confidence that the Eurogroup would be able to take the necessary decisions on Monday, February 20th. Whether this is so, though, is the question which one asks after seeing the reactions of many member states. In the Eurogroup a subgroup had emerged of countries that are out of patience. It would hardly be a surprise but those are the Netherlands, Finland and Germany. In an interview before the conference call German Finance Minister Wolfgang Schaeuble proposed something even much more serious - Greece to postpone the planned for April parliamentary elections and to install a technocratic government that would not include politicians of the kind of Mr Venizelos (the minister of finance) and Mr Samaras (the leader of the New Democracy party). In other words - a government like that in Italy (which will be broadly discussed in a separate analysis).
What Mr Schaeuble said, however, deserves special attention because it casts doubt on whether it is possible an agreement to be achieved on the second bailout on Monday. There are already speculations that it is possible on February 20th a decision to be taken only for a part of the amount in order to avoid previous scenarios when the entire amount is provided and the Greek authorities fail implementing the programme, as was the case with the first bailout programme. Given that in his statement Jean-Claude Juncker is talking about "specific mechanisms to strengthen the surveillance of programme implementation and to ensure that priority is given to debt servicing", one can find it difficult not to think that probably he has in mind an implementation of France's and Germany's proposal from the 6th of February a special escrow account to be created, which the bailout money to be poured in and this account to be used predominantly for debt servicing. By the way, European politicians, quoted by various international media, hinted of a possibility the decision on the second bailout for Greece to be discussed at the Spring European Council on March 1-2.
The good European Parliament
Against the backdrop of these political shuttles and race with time, as Greece has in the beginning of March a maturity of nearly 15 bn euros, which if not paid would lead to a default - a thought which is no longer alien to many countries, including Germany - the spontaneous debate in Strasbourg presented the European Parliament in the role of the good in the classical western The Good, the Bad and the Ugly. Of course, the statements in the house varied depending on the political colour but in general the MEPs raised concern that Greece was not at the top of the agenda, that the decision was being protracted and that in the end of the day different signals were being sent.
For example the leader of the largest political group in Parliament, Joseph Daul (EPP, France), sharply criticised not hearing at least once the word "Greece" in the statements of Nicolai Wammen, Denmark's EU affairs minister, and of Maros Sefcovic, EU Institutional Affairs Commissioner. Mr Daul asked also to know what, after all, is the position of the Commission on the Greek case, given the interview Neelie Kroes, Digital Agenda Commissioner, gave for a Dutch newspaper in which she said that Greece's default would not be a big loss for the eurozone. This statement forced many other EU commissioners and the president himself to explain that everyone wanted Greece to remain in the euro area.
Hannes Swoboda, chair of the group of socialists and democratic (Austria), quite expectedly focused in his statement on the social aspects of the Greek problems. He was first to increase the emotional degree saying: "There are people in Greece's political elite who have to learn to take responsibility. For sure there are politicians in Greece who want things that simply deteriorate the situation. They want to abolish minimum wage. This means a weakening of tax policy, of economic reality and economic might and pushes the country into a crisis. We don't want this". Later he announced that in fact the troika (EC, ECB, IMF) was blackmailing Greece and was overriding democratic rights. "Greece needs pieces of advice not a diktat", he concluded.
The co-president of the group of the Greens, Daniel Cohn-Bendit outstripped himself in terms of colourfulness of his statement and even cast a shadow over another usually most colourful MEP Nigel Farage, co-chair of the group of "Europe for Freedom and Democracy". According to Cohn-Bendit the troika was a group of neo liberal Taleban. He said that it was impossible to ask of Greece only austerity and savings and to claim that the country had done nothing so far. He recalled that public indebtedness had diminished from 10% to 3%, probably meaning only the budget deficit. "Currently we even don't want to give the Greeks 130 bn. We are blocking one specific amount of money simply because something had not been signed! This is an exercise of coercion! This is a coercion of the Greek people!", he exclaimed. For a finale the MEP attacked Germany, recalling that during the occupation of Greece more than 320 million were transfered from Greek banks to Berlin. "If we convert this money into euros, we will have 81 bn euros and the Germans do not want to give this money back. You owe this to the Greeks!", Daniel Cohn-Bendit said vehemently.
On behalf of the liberals (ALDE) spoke Alexander Graf Lambsdorff, who said that patience was running out. "We are obsessed with our desire to help Greece but the phase of promises has to end and the phase of implementation of the measures has to start", he said and got involved in a conflict with Daniel Cohn-Bendit, of whom he asked explanation what "neo liberal Taleban" meant and recalled that "we respect all peoples in Europe and expect to be treated the same way".
Nigel Farage did not betray his temper, explaining that the outbursts on Sunday (when there was arson in tens of buildings in Greece) were due to the fact that the Greeks were deprived of democratic rights. "If I were a Greek citizen I would have been there, trying to destroy this horror". According to him Greece was headed to a revolution.
During the indeed very heated debates the question of democracy in the EU was raised a number of times. The troika was accused several times of despotism and terrorism. The tension reached such levels that a question was asked why the Greek MEPs was lacking self criticism. One of the influential MEPs, Sylvie Goulard (ALDE, France) expressed bewilderment from the debates and sincerely announced: "I don't know what are we talking about here this morning! I find this debate quite surprising". According to her now is not the time of finger-pointing but of discussing the method of implementation. She also joined those who think that at the moment Greece was forced to stabilise its economy. "Forcefully imposing stability in the eurozone is in contradiction to what has been done for more than 50 years", she concluded.
One of the really sober and very reasonable statements was of Polish MEP Jacek Saryusz-Wolski from EPP, according to whom the geopolitical consequences of a possible exit of Greece from the eurozone should be discussed and a following destabilisation. In his words there is a danger of authoritarian scenario in Greece that would lead to instability in the Balkans and the South Mediterranean. "What will be the foreign policy weight if Greece defaulted? The consequences would be very very serious. We don't need accounting assessments but a broader vision", he concluded but his call for seriousness and sobriety remained unheard.
A Greek MEP jumped and explained that everyone was talking about Greece but was forgetting what was behind it. Those are Portugal, Spain and France, whose excellent credit rating has been downgraded. The MEP recalled that a bankruptcy of Greece would mean "a bankruptcy of Europe's social ideas".
In the end of the debates Nicolai Wammen demonstrated a Danish composure and said that the EU had a responsibility to save Greece but Greece too had a responsibility to help itself. On behalf of the Commission Maros Sefcovic recalled that up to the moment Greece had received unprecedented assistance, provided with the consent of the member states. He tried to defend the troika from the accusations of dictatorship and talebanism, reminding that the representatives of the Commission, ECB and the IMF only negotiated and even helped the Greek authorities to negotiate with the investors from the private sector. "In general we are talking about programmes, supported by the private sector or with their participation, and the sum is over 300 bn euros", he said. During the Greek drama last week it became clear that after all there was a link between the negotiations of the bailout programme and the negotiations of the Greek government with the private sector to absorb losses of 50% from the Greek debt in exchange of the eurozone taking its share of the Greek indebtedness.
According to publications in The Financial Times, intense negotiations are underway between the eurozone and the private sector to restructure part of the debt but under the condition the EU to put on the table 93 bn euros. The latest series of the Greek drama will be on Monday. As if attempting to keep the viewers' attention a few more days, the Greeks started to play on the cord of personal feelings. For example, the Greek president announced patriotically during a meeting of military chiefs in the ministry of defence: "We are all obliged to work hard to get through this crisis, but we cannot accept insults from Mr Schäuble. Who is Mr Schäuble to insult Greece? Who are these Dutchmen, who are these Finns? We have always defended not only the freedom of our own country, but the freedom of Europe". Evangelos Venizelos, Greece's minister of finance, was quoted saying that there were people in the EU "who don't want us".