European ministers confront Greece on daunting bailout

GMT 04:52 2015 Monday ,05 October

Arab Today, arab today European ministers confront Greece on daunting bailout

Tourists watch the changing of the guard
Luxembourg - AFP

Eurozone finance ministers on Monday meet for the first time since Greek voters re-elected leftist premier Alexis Tsipras, who now faces the daunting task of implementing the country's cash-for-reforms bailout deal.

Returning as Greek finance minister is the discreet Euclid Tsakalotos who must hurry through a raft of reforms agreed in July in return for a 86-billion-euro ($96-billion) rescue, the country's third in five years.

The three-year rescue package came after six months of acrimonious negotiations led by then-finance minister Yanis Varoufakis, who so angered his 18 eurozone counterparts that Greece was left on the cusp of a humiliating eviction from the single currency.

"Difficult decisions lie ahead," Prime Minister Tsipras warned lawmakers from his Syriza party on Saturday, launching a crucial week that sees a confidence vote in Greek parliament on Wednesday.

The challenge comes as the country is also struggling to cope with a huge influx of migrants and refugees arriving on its shores, mostly Syrians fleeing civil war.

On returning to office on September 25, Tsipras pledged to "quickly implement" the terms of the EU bailout he initially rejected in an anti-austerity referendum in early July, confounding his European partners.

His U-turn at a dramatic summit shortly after split the Syriza party and forced Tsipras to step down, but he comfortably won re-election last month with a pledge to soften the impact of the bailout.

Tsipras also promised to win debt forgiveness, which Greece's eurozone partners have accepted in principal, though the talks to clinch a deal promise to be difficult.

"We need to quickly wrap (up) the first review, so that the indispensable discussion on the restructuring of the debt can begin," Tsipras said on Saturday.

"Our main goal is to exit as soon as possible the supervision and regain access to the foreign markets," he said.

- Aid, banks and debt -

The first review of whether Athens is abiding by the strict bailout programme agreed to pull Greece back from the brink of economic collapse is due later this month.

At stake for the new government will be the release of a new 3-billion-euro tranche of aid, a rescue of Greek banks and the talks on slashing debt.

Several European sources told AFP that the review would be delayed, but this was not seen as an immediate issue.

"It seems clear that this will be postponed, no date is fixed," a top European diplomat said.

Another source added: "The first review I presume will start in October but not finish in October."

The bailout includes provisions deeply opposed by Greeks such as reforming state pensions, tax increases on farmers, privatisations of state companies, and freeing up of closed markets like pharmacies.

In all, Greece's parliament will have to pass 15 reforms in October alone.

A European source said the recapitalisation of Greece's banks would be handled separately from the toughest part of the bailout review, which involves cutting pensions.

Up to 25 billion euros of Greece's bailout are earmarked for the recapitalisation of the banking sector.

Of this, 10 billion euros is immediately available to be injected into the financial system once the European Central Bank has assessed the fallout of bank closures suffered by Greece at the height of the crisis this summer.

The so-called bank recap would take place by November 15 in return for financial sector reforms that are not considered controversial, the European source said.


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