Galery

1

Victoria Mindova 

"There is great concern in the euro area and Greece must meet its obligations under the recovery programme as soon as possible", said the Greek Minister of Finance Evangelos Venizelos at the extraordinary press conference which followed the Eurogroup meeting in Luxembourg yesterday. He said the next three months would be critical for the country and within this time a series of reforms that had been delayed over the last two years should be made. Evangelos Venizelos spoke very harshly to Greek journalists after his last meeting with EU finance ministers. The feeling of insecurity in Europe is getting stronger, as reflected also by the Greeks who are losing confidence in the capabilities of today's government to tackle the growing crisis.

Venizelos stressed that Greeks should finally decide what they want, namely whether the Troika should remain an important presence in the country and help restructure it, or not interfere with local problems and leave Greece alone in the process of change and without the financial support of the European institutions and the International Monetary Fund. "There is huge resistance to the Troika’s impact on the economic programme, but on the other hand, everyone would like it to be here and to have no gaps in our negotiations with it," pointed out Venizelos. He noted that whenever the mission draws attention to gaps in the programme and wants more action, the public reacts very strongly, but at the same time this society is not ready to take the necessary steps to achieve the objectives set in the programme. "The tranches are granted subject to meeting certain conditions. There is no other way."

The minister stressed that the recovery programme was applied to stabilize the economy, not to harass people. He acknowledged that the process is not easy and that ordinary people pay the highest price, but without international funding the measures would be much more drastic and the consequences for the euro area much graver. The Minister of Finance said that if the state was able to finance its own recovery programme it would give more weight to structural changes, but this was not currently possible. Contrary to this statement, many analysts consider that if Greece could finance the reforms itself it would not be in the situation it is in today.

"Reforms that could have been applied for about a month now have to be met for half a day. Therefore, the participation of all political forces and the people themselves is needed," said Venizelos a day before the announced national strike of the largest unions in the country. He stressed that he had not gone to the meeting of the ECOFIN Council and returned to Athens because of the crisis situation affecting the country. The mission of the supervisory Troika comprising the International Monetary Fund, the European Central Bank and the European Commission is in the Greek capital and examination of the economic programme continues. Their report will set the basis not only for the granting of the sixth tranche of the bailout but also for implementing the new programme, following the arrangements with the European Council of July 21 this year, which relate to decisions and measures, by 2014.

Once the euro zone finance ministers have found that the deficit can not reach the 7.6% of GDP initially set in the budget but 8.5% of GDP, Greece should apply all measures to reach this goal . Europeans, however, have learned their lesson and left a loophole that allows for a divergence of 0.5% in the final value of the deficit at the end of 2011. According to the Minister of Finance, all announced measures should be voted on by October 31 this year and immediately applied therupon. "It is not enough just to vote on measures, but to apply them. We have gaps and delays in structural changes." It will become clear by February 28 next year whether the Greeks have dealt with the targets set for 2011. The programme for 2012 provides for further action to offset the gaps of 0.5% of GDP, but not larger. "Let's make the best of the fact that we are able to refute negative forecasts," Venizelos enjoined. He stressed that there would be no need for new measures, if Greece implements the specified measures correctly, accurately and systematically.

Venizelos avoided directly answering the question of whether an additional haircut on the value of Greek government bonds, which are owned by private funds, is considered. He said the terms of the decision are under discussion, but declined to give specific information on whether the private owners of the Greek debt will be charged with cuts that are more serious. The attitudes to this issue are diverse in Europe. The European Central Bank does not want to hear a word on this issue, but many European economists believe that despite the efforts, Greek foreign debt has remained unmanageable and a further haircut is necessary. Venizelos stressed that the last meeting of Eurogroup clarified three things: whatever happens, the financial support for Greek and European banks is fully ensured, Greece will remain in the euro area in any case, and Greece’s default is not up for discussion.