Merkel ally: Greece needs firmer hand
EUROPE must be more hardline with Greece to push the country towards economic reform, according to the parliamentary leader of Germany’s ruling Christian Democrats.
Valder Kauder, an ally of Chancellor Angela Merkel, said that Germany has not yet decided whether to boost its bailout loan to Greece, despite a statement by the IMF, European Commission and ECB on Friday that Athens had agreed on a set of reforms that would keep its aid money flowing.
“Greece is trying but its efforts are insufficient,” Kauder said, in a sign of Berlin’s increasing impatience with Greece’s pace of reform.
“We’ve got to use a firmer hand to lead Greece on the route to solidarity (with the Eurozone)… It’s time that Greece finally becomes a state with central European standards. That’s the only way we can prevent Europe from going to seed,” he said.
Greece affirmed on Friday that it agreed to a series of structural reforms to sort out its finances and overhaul its economy, but the country’s unions have promised repercussions if the government goes ahead with privatisation plans, with GENOP, union for the part-state owned power company PPC, threatening to impose blackouts.
But Kauder said: “We can’t let ourselves be influenced by the demonstrations in Greece.”
Protestors are objecting to austerity measures that include a €50bn (£45bn) privatisation programme. On Friday, Greece said it had requested expertise and technical assistance from the EU and Eurozone member states “for capacity building in the civil service”. Athens is hoping that external help will lend credibility to a new agency it is creating to pull off the asset sales.
Friday also saw the IMF row back from suggestions that it might not pay out Greece’s next tranche of bailout aid, crediting “further progress” on an “agreed comprehensive policy package” for making it possible to release the cash in July.
Eurogroup president and Greek Prime Minister George Papandreou also confirmed that talks on a second bailout are ongoing. “We have seen that the markets remain sceptical. And this is why we are now discussing about additional financial support,” said Papandreou.
AT A GLANCE | IMF REVIEW OF GREEK FINANCES
● Joint statement
The “troika”, consisting of the IMF, ECB and European Commission, concluded a review of Greece’s finances on Friday and announced that Athens will be able to receive its next instalment of aid in July due to agreement on “strict implementation” of a deficit-cutting plan and economic reforms. Markets had been spooked by previous statements that the IMF could withhold the next €12bn ( £10.7bn) tranche of aid due to Greece failing to get its financing in place for next year.
● Privatisation scheme
Greece has agreed to set up an independent government agency to administer its planned €50bn of asset sales. The move allows Athens to draw on expertise and manpower supplied internationally to get the sales off the ground while ducking criticism that it is giving up its sovereignty by handing over administration of the sales entirely to the IMF or EU. It has also promised to speed up the process to get it done by 2015.
● Administrative help
In addition to help with its privatisation scheme, Greece has asked for bilateral assistance from Eurozone countries and help from the EU to establish a civil service capable of carrying out the planned reforms. Prime Minister George Papandreou said he hopes the technical assistance will cover every aspect from cutting bureaucracy to health policy and boosting the tourist industry.
● Growth
There was little that was new on the government’s economic reforms, except a restatement of Greece’s commitment to reform the labour market, liberalise transport and exports policy and overhaul healthcare and state administration.
● Second bailout
There is not yet an agreement on extending the maturity of Athens’ first bailout loans or increasing their size, although Greece confirmed that it is in discussions about it. There is an ongoing debate about the extend to which Athens’ private creditors will share the cost, with Germany in favour of burden-sharing. But the ECB insists that any private sector involvement must be voluntary and very mild.