In a rare piece of good news for Greek leaders, the European Stability Mechanism (ECM) confirmed Tuesday (10 March) that it has been forced to throw the cash-strapped country a half-billion-euro lifeline.
After a week in which Eurogroup finance ministers and the European Central Bank turned the screws on Athens, the 555 millions euros will give its radical new government a brief respite from its creditors.
In the increasingly fraught battle of wills with Brussels and Berlin, the decision is a rare victory for Athens, with economist Edward Hugh tweeting, “Eurogroup just blinked.”
The Luxembourg-based ECM had initially been reluctant to part with the money, according to the semi-official Athens news agency.
But with Greece having to find eight billion euros in March alone to meet its debts – 1.5 billion of that to the IMF – the relief the sum gives to the anti-austerity coalition is only relative.
With tension mounting, Prime Minister Alexis Tsipras again pressed home Greek claims Tuesday for unpaid reparations from Germany for the destruction it wrought on the country during World War II.
Athens insists it is owed as much as 162 billion euros, or nearly half its total public debt.
War reparations dig
Many in Greece blame Berlin in particular for imposing the austerity measures that helped drive the country into deep recession.
Tsipras said his government was “choosing the path of negotiation. That is our duty to history, to the people who fought and to the victims who gave their lives to defeat Nazism.”
In a further dig at Berlin, he added, “As we are fulfilling our obligations, all the other parties should do the same.”
The Third Reich forced the Greek central bank to loan it 476 million Reichsmarks during the war, which has never been reimbursed.
A German lower house of parliament report in 2012 put the value of the loan at 7.7 billion euros.
Athens’ surprise new windfall comes from preferential shares the Greek government took to recapitalise banks at the height of the financial crisis and from money later poured into the Hellenic Financial Stabilsation Fund (HFSF) as a part of a Europe-wide effort to guarantee the banks.
The facility fund was set up in 2010 to help keep banks afloat in EU countries initially worst hit by the crisis, including Greece, Ireland and Portugal.
ECM director general Klaus Regling had hinted after a crunch Eurogroup meeting in Brussels on Monday night that “we will certainly not have any claim on that amount” before the final confirmation came that the money could go back to Athens.
“The EFSF does not have a stake in this as this sum is related to activities that took place before the EFSF disbursed money to Greece,” a spokesman for the fund said Tuesday.
Greece secured a four-month extension of its financial rescue on 24 February, when its eurozone partners approved an economic reform plan that backed down on key measures and promised that spending to alleviate social distress would not derail its budget.
Germany's rejection of an initial Greek request for a six-month loan extension forced Athens into a string of politically sensitive concessions, postponing or backing away from campaign promises to reverse austerity, scrap the bailout and end cooperation with the "troika" of EU, ECB and IMF inspectors.