EU finance ministers gathered in Brussels yesterday to formalise a timetable for the Greek government to reduce its budget deficit from 12.7% to 3% by 2012.
Athens' problems overshadowed other items on the agenda, such as the EU's Services Directive or talks on a European bank levy.
The ministers agreed to give Greece until 16 March to present a report on new budgetary measures to be implemented over the course of 2010.
By 15 May, the country will have to flesh out the detail of those measures and submit quarterly reports thereafter.
The Greek recovery plan will hinge on a report to be submitted in March. If the European Commission thinks the Greek authorities are not on track, they will be expected to come up with additional measures.
The Greek finance minister confirmed that he would not yet offer anything more than the public sector wage cuts and tax reforms already on the table, but admitted he would develop additional solutions if asked to do so in March (EurActiv 15/02/10).
As a back-up plan, member states also stressed that they would offer support to the Greek economy if needed, as agreed by EU leaders on 11 February.
What kind of support?
Responding to journalists' questions about a possible "bailout", ministers were reluctant to offer any detail on what contingency plans would look like.
Irish Finance Minister Brian Lenihan told journalists that some member states - notably Germany - were unwilling to spell out in detail what member states would be expected to do to prop up the Greek economy.
Lenihan also refused to disclose what such measures would look like, saying that ministers had agreed that such discussions were "unwise".
In the absence of German Finance Minister Wolfgang Schaeuble, the country's state secretary, Jörg Asmussen, poured further pressure on Greece at the close of yesterday's talks.
"We do believe that that Greece will have to take additional measures [to decrease its deficit]," the secretary told the press.
Teetering fiscal sovereignty
Contrary to reports that Greece could leave the euro, yesterday's meeting was a show of solidarity, especially from the 16 ministers of the Eurogroup.
Angela Merkel's widely reported mention of a European "economic government" at last week's summit was mooted again at a press conference during which the Spanish finance minister, Elena Salgardo, endorsed the idea by saying greater co-ordination on economic policy was required.
For the first time, the fiscal sovereignty of a eurozone country could now be called into question as member states agree that securing the stability of the euro is a shared responsibility.
"The sovereign states [in the euro zone] have a common currency so we must take all decisions regarding the euro together," Lenihan told the press.
A provision in the Lisbon Treaty gives member states the power to take binding decisions on the fiscal policy of another partner.
Though diplomats say such a scenario would be unlikely, if Greece and the European authorities were to reach a stalemate on fiscal policy, member states could cast a qualified majority vote for other measures and Greece would be excluded from the ballot.
In addition, before the end of the spring, the European Commission will table proposals on how it plans to deepen "surveillance" of European economies, Olli Rehn, the commissioner for economic and monetary affairs, said at a briefing after the summit.
Greece sidelines bank levy
Though Greece dominated yesterday's talks, member states decided to push for further implementation of the EU's Services Directive, a law establishing common rules for the provision of services in the bloc (EurActiv 29/01/10).
Talks on a bank levy to make the banking sector accountable for multi-trillion bailouts were also sidelined by Greece and have been deferred until the next Council discussions in March (EurActiv 16/02/10).
Michel Barnier, the EU commissioner for the internal market, added that he would be flying to Washington and New York in the coming days to discuss both US President Barack Obama's proposals on a financial sector levy and a European equivalent.
Ministers also confirmed the appointment of Portuguese politician and economist Vitor Constâncio as vice-president of the European Central bank (EurActiv 16/02/10).
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