Greek deal on cuts appears to not yet fulfil bailout conditions: German finance minister

ATHENS — Not long after Greece made the politically unpopular decision to slash government spending to ease its debt crisis, Germany’s finance minister questioned whether the deal goes far enough to earn approval of a crucial C130 billion bailout.

ATHENS — Not long after Greece made the politically unpopular decision to slash government spending to ease its debt crisis, Germany’s finance minister questioned whether the deal goes far enough to earn approval of a crucial C130 billion bailout.

Greece’s new austerity plan would make deep cuts to jobs and wages and it ignited fresh criticism from unions and the country’s labour minister, who resigned in protest. Finance ministers from the 17 countries that use the euro are meeting in Brussels to scrutinize the plan.

Greek prime minister Lucas Papademos earlier Thursday said that all major party leaders in the country’s coalition government had given their backing to a new round of painful spending cuts he had worked out with the European Union, the European Central Bank and the International Monetary Fund and that the talks “were successfully concluded.”

However Germany’s Finance Minister Wolfgang Schaeuble on Thursday warned that the new round of spending cuts appears to not yet fulfil all the conditions for a C130 billion bailout.

Germany is a leading force in the group of 17 countries that use the euro as their currency — the so-called “eurozone” — using its considerable economic clout to influence decision-making and policy.

“The agreement, as far as I understand, is not at a stage where it can be signed off,” Schaeuble said as he arrived in Brussels to meet with his eurozone counterparts, the heads of the European Central Bank and the International Monetary Fund. “It’s a stance in the negotiations that was agreed on but no one expects that this negotiation stance can get support.”

The crucial agreement in Athens came shortly after Greek Finance Minister Evangelos Venizelos arrived in Brussels for talks on the new bailout with his colleagues from the 17 euro countries. Although all other cuts demanded by the troika of bailout creditors were approved — including a 22 per cent cut in the minimum wage, firings of 15,000 civil servants and an end to dozens of job guarantee provisions — party leaders had balked at new pension cuts worth an estimated C300 million ($400 million), leaving the bailout in limbo and the threat of bankruptcy high.

A spokeswoman for Papademos’ office said earlier Thursday that the deal would allow alternatives to the rejected pension cuts. She did not elaborate on what the alternative proposals were. The spokeswoman spoke on customary condition of anonymity.

Greece needs the bailout by March 20 to redeem C14.5 billion worth of bonds coming due.

A forced bankruptcy would likely lead to the country’s exit from the euro common currency, a situation that European officials have insisted is impossible because it would hurt other weak countries like Portugal, Ireland and Italy.

But financial analysts fear a chain reaction similar to the financial meltdown triggered by the collapse of investment bank Lehman Brothers in the fall of 2008.

When eurozone leaders tentatively agreed on a second bailout for Greece in October, they set several key parameters that would have to be met for country to get more aid.

Those included bringing Greece’s debt level down to 120 per cent of economic output by 2020, limiting official rescue loans to C130 billion and getting firm approval from all Greek political forces that new spending cuts and reforms would actually be implemented.

“Those general requirements are not fulfilled yet,” Schaeuble said, adding that no decision on the new bailout was expected at Thursday’s meeting.

In addition to the new austerity measures, another method to reach the October targets is a deal with banks and other private bondholders to forgive Greece some C100 billion in debt.

However, last week an EU official said that even taking into account the debt forgiveness and planned austerity measures, a gap of some C15 billion remained to reach the targets.

The EU hopes that the ECB, which holds a significant amount of Greek bonds, will contribute to closing that gap, but the central bank has so far dodged questions on whether it will participate.

Jean-Claude Juncker, the Luxembourg prime minister who will chair Thursday’s meeting, also said that no decision was expected. “There are still a lot of uncertainties,” he said, referring to the Athens deal.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

The future of Westerner Park continues to be plagued by many unknowns, including when city council will make a decision about financing its operations. (File photo by Advocate staff).
Red Deer city council delays making decision on Westerner Park financing

It will mean missing the next opportunity to apply for a provincial loan

Nineteen-year-old Amanda enjoys a ride during a visit to Spirit’s Respite Ranch near Stettler. photo submitted
Busy days at Spirit’s Respite Ranch near Stettler

The ranch, which launched operations last summer, provides support through animal interaction

Red Deer Mayor Tara Veer at the announcement that the city will be getting a drug treatment court Thursday. Jason Luan, associate minister of mental health and addictions, looks on.
Photo by PAUL COWLEY/Advocate staff
Veer concerned about rising COVID-19 cases in Red Deer

The City of Red Deer is reminding citizens to protect themselves against… Continue reading

Rode
Volunteering played major role in RDC awards

Under normal circumstances, the RDC Red Deer Bottling Athlete of the Year… Continue reading

Alberta chief medical officer of health Dr. Deena Hinshaw said on Thursday that the province has seen its first case of the B.1.617 variant. (Photography by Chris Schwarz/Government of Alberta)
Red Deer nears record number of active COVID-19 cases

Alberta reports 1,857 new cases of COVID-19, 1,326 new variants

Curtis Labelle (second from left) and his band are planning a cross-Canada tour in 2022. Meanwhile, Labelle is continuing to host his weekly livestreamed talk show, Chattin 88. (Contributed photo).
Red Deer rock pianist takes on a talk show role

Curtis Labelle’s Chattin 88 gets views from around the globe

Toronto Maple Leafs' Nick Foligno (71) and Mitchell Marner (16) celebrate Marner's goal on Winnipeg Jets goaltender Laurent Brossoit (30) during second-period NHL action in Winnipeg on Thursday, April 22, 2021. THE CANADIAN PRESS/John Woods
Leafs end five-game winless skid with 5-3 win over Jets in North Division battle

Leafs end five-game winless skid with 5-3 win over Jets in North Division battle

Taylor Pendrith from Richmond Hill, Ont. salutes the crowd after sinking a birdie on the 18th hole to come in at five under par during first round of play at the Canadian Open golf championship Thursday, July 24, 2014 in Montreal. THE CANADIAN PRESS/Paul Chiasson
PGA Tour Canada splits into Canadian, American circuits for 20201

PGA Tour Canada splits into Canadian, American circuits for 20201

Like father, like son: Floreal emerges as one of Canada’s top sprinters

Like father, like son: Floreal emerges as one of Canada’s top sprinters

Toronto Blue Jays center fielder George Springer (4) walks on the field during a team workout, Wednesday, March 31, 2021, at Yankee Stadium in New York. The Blue Jays face the New York Yankees on opening day Thursday in New York. (AP Photo/Kathy Willens)
Injured Jays OF Springer to play in intrasquad game Friday

Injured Jays OF Springer to play in intrasquad game Friday

Toronto Raptors' Khem Birch (24) defends against Brooklyn Nets' Blake Griffin during the second half of an NBA basketball game Wednesday, April 21, 2021, in Tampa, Fla. (AP Photo/Mike Carlson)
Raptors ride strong 3rd quarter to 114-103 win over Nets

Raptors ride strong 3rd quarter to 114-103 win over Nets

Team Canada's Jocelyne Larocque celebrates her goal past the U.S.A. with goaltender Embrace Maschmeyer during first period of Women's Rivalry Series hockey action in Vancouver, Wednesday, February 5, 2020. THE CANADIAN PRESS/Jonathan Hayward
Stunned Canadian players head home after women’s world hockey cancellation

Stunned Canadian players head home after women’s world hockey cancellation

Health Minister Patty Hajdu is shown at a COVID-19 press conference in Ottawa on Friday, Dec. 11, 2020. THE CANADIAN PRESS/David Kawai
Health Canada proposes new restrictions on talc in some personal care products

Health Canada proposes new restrictions on talc in some personal care products

Tampa Bay Buccaneers quarterback Tom Brady passes under pressure from Kansas City Chiefs defensive end Alex Okafor during the second half of the NFL Super Bowl 55 football game, Sunday, Feb. 7, 2021, in Tampa, Fla. Lawmakers are debating legislation to legalize single-event betting as a bill reaches final reading in the House of Commons. THE CANADIAN PRESS/AP/Mark Humphrey
Bill on single-game sports betting on cusp of passing — but not for first time

Bill on single-game sports betting on cusp of passing — but not for first time

Most Read