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08/12/2016

EU support for keeping Greece in eurozone elusive

Social Europe & Jobs

EU support for keeping Greece in eurozone elusive

Only Greek flags present. Anti-referendum demo, Brussels.

[Joel Schalit/Flickr]

Greece will vote on its future in the eurozone on Sunday (5 July). If such a poll were to be conducted across the EU, it is far from certain that a majority would back further concessions to Athens as the price for keeping the Union intact. The EurActiv Network reports.

Eastern European countries in the euro area are saying, “Don’t ask my people to help you again when my standard of living is lower than yours,” French finance minister Michel Sapin commented today (1 July).

Indeed, of all the Eastern European newcomers, only Slovenia has something approximating the same GNI per capita as Greece, Slovakia Estonia, Latvia and Lithuania having lower levels.

Moreover, Slovakia is the only country where a government fell in 2011 because of the contribution it needed to pay to the bailout fund from which Greece benefitted.

Slovakia: ‘Not at any price’

Slovak Prime Minister Robert Fico said that Slovakia wants Greece to stay in the eurozone, however, “not at any price.”

“We are mentally and technically ready for a crisis scenario – Athens leaving the eurozone,” Fico stated. Slovakia should not be significantly affected by the possible exit of Greece from the euro area because it is not especially close to Greece economically.

In the past, Fico also opposed the idea of Greek debt relief, called it a “false solidarity”.

“I do not see a reason why Slovakia, with its salaries and pensions, should directly give money to somebody else,” Fico said in February.

The issue of pensions resonates with the public as well. Since 2009, the average pension in Greece has reportedly decreased to €833. In comparison, despite the fact that Slovakia has one of the fastest growing economies in the eurozone, the average pension has only reached €408.

Regarding the Greek referendum, Minister of Finance Peter Kažimír, along with the Minister of Foreign Affairs, Miroslav Laj?ák, pointed out that the planned event comes too late and no longer has the potential to solve anything.

Bulgaria: ‘Eurozone should get disciplined’

Bulgaria is not in the eurozone, but as the only EU neighbour of Greece, the country feels affected by the possible scenarios of a Greek default.

Speaking to the press on 26 June at the last EU summit, Bulgarian Prime Minister Boyko Borissov said he had asked EU leaders to look at the statistics about how many EU summits they have spent working “until four in the morning” on the Greek dossier.

“I asked Alexis [Tsipras] a simple question. Will they be able after six months to continue by themselves, or not?” Borissov said.

The Bulgarian Prime Minister also said that he had initiated measures so that funds from the Greek banks in Bulgaria don’t get repatriated to Greece.

Asked about Bulgaria’s ambitions to join the eurozone, he said:

“If the eurozone doesn’t get disciplined, I see no reason why we should hurry to join it.” Borissov added:  “If we were in the eurozone, we too would have to give Greece money. So the poorer will give money to the richer, which doesn’t make sense to me.”

Borissov also slammed Greece for not doing enough to fight smuggling, and said he has invited his Greek colleague, Alexis Tsipras, to come and see what measures have been taken at the Bulgarian side of the border.

“If the two countries work hand in hand, they will be able to collect much more income by curbing smuggling, and this would benefit the Greek budget,” Borissov said.

Czech Republic: Bankruptcy not necessarily bad

The Czech Republic is not a member of the eurozone either. The strongest statement was made by Finance Minister Andrej Babiš, who said that “Greece should finally go bankrupt.”

“I do not know whether you know that in the last 200 years, Greece went bankrupt four times. And I think that it should finally go bankrupt for the fifth time so that the space gets clean,” Babiš said.

Prime Minister Bohuslav Sobotka linked the Greek default to the immigration crisis.

“The bankruptcy of Greece would harm whole EU and worsen the refugee crisis. 80 % of Czech export goes to eurozone countries and that is why the stability of the eurozone is among our strategic interests,” he said last week. Sobotka stressed the need for a stable Greece to tack the current migration wave. “Greece should improve the southern border of the EU. If it goes bankrupt, it will worsen the whole refugee crisis.”

Sobotka also called “absurd” the referendum initiated by the Greek government.

Petr Fiala, the leader of the opposition party ODS, which is campaigning against the entry of the Czech Republic into the eurozone in the future, found new arguments in the Greek crisis.

“The spendthrift policy in combination with the currency which the government could not influence, leads to the crisis. Greece is a proof and warning,” he wrote on Twitter.

France divided

In France, the leader of the French Republicain (formerly UMP) delegation in the European Parliament, Alain Lamassoure, showed his impatience with the Greek debt issue on Saturday (28 June). He suggested a different referendum question that could be put to the other European countries.

“Do you agree to keep paying part of the incomes of Greek civil servants and retirees, instead of the Greek taxpayers?” Lamassoure tweeted.

However France remains divided on Greece, mostly along political lines.

Jean-Christophe Cambadelis, the Greek-descended president of the French Socialist Party, has made no attempt to hide his opposition to the idea of Greece leaving the eurozone.

He told iTélé on 22 June that Grexit would be “a leap into the void”.

For the left wing of the party, the government’s position on the Greek crisis has been too much aligned with Germany.

Socialist MEP Emmanuel Maurel summed up the situation as he sees it: “The problem is that François Hollande wants to preserve his relationship with Angela Merkel, which has been on the up lately. But this is not acceptable.”

The German Chancellor made it clear on Monday that a negative response to Sunday’s referendum would leave Greece with no option but to leave the single currency.

“It’s no wonder the Greeks slammed the door on the negotiations, when you look at what they were being offered,” the MEP added.

Emmanuel Maurel is not the alone in his support for Syriza.

The issue divided the Socialist Party congress in Poitiers in June. The left-wing faction booed the anti-Syriza members, while pro-Syriza speakers were received with applause.

“France must commit to standing resolutely beside the Greeks, and not just paying them lip service. And too bad if it has to come at the expense of the old German savers!” Maurel added.

On the right of French politics, the Republicans have adopted a position of full frontal opposition to the Syriza government, the message being talks are possible, but with different interlocutors in Athens.

Majority of Germans want Greece out of the euro

In Germany, in June, a clear majority of Germans spoke out in favour of a withdrawal of Greece from the eurozone. According to a poll conducted by YouGov, 58% said they would prefer the country leaving the euro. Conversely, 28% said they want to keep Greece in the eurozone. 14% percent had no opinion or did not specify. 

Leading politicians of Germany’s opposition parties are accusing Chancellor Angela Merkel and her government of not having a concept in dealing with the Greek crisis.

“They are willing to accept a crash without knowing exactly what will happen after,” said Left Party leader Gregor Gysi after a meeting of Merkel with top representatives of all parties represented in parliament on Monday.

However, Green and Left participants at this meeting say they got the impression that the federal government is generally ready for further negotiations towards a solution. Left Party leader Bernd Riexinger said he believes Merkel does not want to “be the Chancellor under whom the eurozone in its current form breaks up”.

“Greece is a member of the eurozone,” stated government spokesman Steffen Seibert on Monday. “Our effort has always been to allow Greece to remain a member of the eurozone.”  Merkel herself called for “compromises” from the Greek side on Monday and reiterated her constant warning of recent years: “If the euro fails, Europe fails”. Should the Greek government ask for further negotiations after the referendum, “we will of course not avoid such negotiations,“ Merkel said. However, she insisted that she and other European leaders would not budge from their past insistence on pro-market overhauls in Greece in exchange for more bailout money. Europe’s currency and economic union depended on the principles of “self-effort and solidarity,” she explained. “If these principles are not upheld, I am deeply convinced, the euro will fail and that we do not want.”

Vice-Chancellor Sigmar Gabriel (SPD) issued a warning, calling the referendum in Greece a vote of the Greeks on the euro as their currency. “It must be clear what is being decided: It is in essence the question of ‘Yes or No to remain in the eurozone’,” Gabriel said. The Greek government needed to tell its population this openly, he demanded. On Wednesday, there will be a debate on the Greek crisis in the Bundestag.

Italy: concerns connected to banks

In Italy, the Greek drama revives memories of December 2011, when speculative attacks were so strong that the Italian government had to face a default scenario.

Since then, the Italian Ministry of Finance has planned specific actions to manage its debt and avoid any kind of problems. More specifically, during the first part of the year, most of the bond auctions were brought forward to take advantage of the low spreads. In April, about 50% of the total annual bonds were already sold. That’s why, at official level, nobody is expecting a big shock, even though Italy has about 37,2 billion euros in credit exposure to Greece.

Talking about public perception, the biggest concern is connected to banks: if sovereign spreads increase, the cost of mortgages could raise dramatically. The Italian banks association (Abi) gave some numbers to describe what is going to happen: the real exposure banks have to Greece is just 800 million euros.

That’s why an uncontrolled Grexit would not be a big deal for Italian credit market. There’s some anxiety, but the dominant feeling is that Italy is generally much more solid than 2011.

Spanish party Podemos sees plot

Pablo Iglesias, the leader of left-wing Podemos, the winner in many Spanish regions after the municipal elections held last May, said the hypothetical scenario of a “Grexit” would have direct consequences not only for the Greek people, but also across the EU, and could also damage the electoral prospects of the emerging parties in southern Europe, similar to Syriza.

Podemos is often called “the Spanish Syriza” and the prospects are that it could be part of a leftist government following parliamentary elections this autumn.

“They want to scare the Spaniards punishing the Greeks,” Iglesias said.  The last proposals by the (former) troika to Greece, he added, are an “ultimatum and blackmail” to Athens.

Podemos supports Tsipras’ decision to call for a referendum on the European plan, “as democrats do” everywhere, Iglesias pointed out.

Conversely, when Prime Minister Mariano Rajoy was asked about the referendum, he said “nobody likes it”.

Rajoy considers it of “crucial” importance that Greece remains in the eurozone. “The worst thing that can happen to Greece and to the Greek citizens would be a euro exit,” he said. The premier that “Spaniards can rest,” because, thanks to the reforms implemented by his right-wing government, the Iberian country was no longer in the “danger zone” anymore.

Spain´s Minister of Economy and Competitiveness, Luis de Guindos, said Spain was “ready” to prevent a possible contagion of the Greek crisis. In a radio interview, De Guindos, who is Spain´s candidate for the presidency of the Eurogroup, stressed the last good data on growth and deficit in Spain somehow “protect the Spanish economy from a contagion process” from Greece.

On the other hand, the secretary general of the Spanish Socialists (PSOE), Pedro Sánchez, warned Greece against the danger of a hypothetical debt restructuring. “A debt must always be paid,” he said last week, on the sidelines of a meeting of the European socialist leaders. Tsipras is “causing instability”, he added. This instability is causing suffering to the most vulnerable (the Greek people), “who ends up paying for this crisis”.

Cyprus to be mediator in Greek talks

Cyprus, a country in which the Greek flag is seen much more often than the national one, has suffered immensely from the exposure of Cypriot banks to the Greek government crisis, in 2012-2013.

Cypriot President, Nicos Anastasiades, is known to have made a series of contacts with EU leaders to lobby for a compromise between Athens and the creditors.

Anastasiades said: “We play a leading role in order for Greece to remain (in the eurozone). We want (Greece) to be strong for all the obvious reasons, but also because a program that will give the opportunity of economic recovery is needed, but also a relief, especially of Greek citizens.”

At the same time, the Cypriot MEP of EPP, Eleni Theocharous, called for an immediate EU response to the humanitarian crisis in Greece. Asked by EurActiv Greece to comment on the dramatic developments in Athens, Dr. Theocharous said that she had sent a letter to the President of European Commission, Jean Claude Juncker, urging him to take an immediate initiative to tackle the humanitarian crisis that Greek citizens have been through, regardless of the referendum’s outcome.

Turkish party offers to pay the Greek IMF installment

Although Turkey is not an EU member, it has been is watching the developments in Greece with concern, mainly because the EU is its main trade partner and especially the tourism industries of the two neighbouring countries are closely interlinked.

“Populism leads to disaster!” tweeted Mehmet ?im?ek, Turkey’s conservative finance minister, sharing a link to an article about the capital controls imposed in Greece.

Meanwhile, a leftist party in the Turkish parliament floated the unusual idea that Turkey could foot the bill. Speaking at a news conference held in Ankara, Ertu?rul Kürkçü, an MP from People’s Democratic Party (HDP) said that Turkey should show solidarity and offer its neighbour a 1.6bn euro interest-free loan.

“Europe should run to Greece’s rescue and save itself. Greece’s failure would pose serious ruptures for the euro and the European Union,” said Kürkçü, adding that that “Germany, ECB and IMF were exerting pressure on the Syriza government not because they defended the interests of Greece, but of their own money”.

Unlike Syriza, the pro-Kurdish HDP is actually affiliated with the Party of European Socialists (PES). However, Syriza openly supported the HDP in Turkey’s last general elections in early June.

The EurActiv Network: Myrna Nikolaidou, Lucie Bednarova, Can Girgiç, Giuseppe Latour, Aline Robert, Daniel Tost, Martina Dupakova, Fernando Heller, and Georgi Gotev