Tuesday, 4 October 2011

Fingers In Ears

Pretend you're the EU (yes yes I know). You insist that Greece will meet the terms of its bailout conditions, and confirm that you won't lend any more money to it if it doesn't (from Sept 2011):
BRUSSELS (MNI) - Disbursement of the next tranche of EU-IMF bailout aid for Greece cannot be guaranteed unless Athens meets all the conditions agreed, Jean-Claude Juncker, president of the Eurogroup of EMU finance ministers, said Wednesday.

Greece has made "enormous efforts," Juncker acknowledged, but Greek authorities "must know that they have to respect the objectives defined by the Eurozone."

"The conditionality is of primary importance," he said. Before the next disbursement of loans to Greece in mid-December can be decided, "it is necessary that all the conditions defined by the Eurogroup be respected."

"If this is not the case, it is not guaranteed that the transfer of the next tranche of aid can take place," he added.

Then, whoops, Greece says... er... we can't meet the targets:
Stocks took another hit Monday after Greece admitted it won't meet its deficit reduction targets
So what to do, what to do? Well easy, fudge it and carry on lending:
Eurozone finance ministers gave a clear indication they were preparing to paper over Greece’s failure to hit international lenders’ mandated budget targets for 2011, saying they would now evaluate Athens’ performance based on goals that combine both this year’s and next year’s finances.

The decision came a day after Greek finance minister Evangelos Venizelos acknowledged Athens would miss the 2011 benchmarks, which the European Union and the International Monetary Fund had set as a prerequisite for disbursing an essential €8bn bail-out payment that is already past due.

By combining 2011 with 2012 targets instead, the EU appeared to be preparing to fudge this year’s missed benchmarks, paving the way for the closely watched aid payment, which Athens says it needs in a matter of days or it will run out of cash.
But don't worry:
...senior eurozone officials warned they were likely to extract new concessions for 2013 and 2014 in the coming days before signing off on the new money.
Ah that's all ok then. Meanwhile in reality land, a European bank could be about to break-up, potentially the first casualty of Greek contagion:
BRUSSELS—Dexia SA's shares fell sharply for a second-straight day Tuesday, as Belgian Finance Minister Didier Reynders said the French and Belgium governments may act to help the troubled bank amid signs that it could be split up.

The troubled French-Belgian bank said in a statement after midnight Monday that the bank's large portfolio of legacy assets is hampering it structurally, following a five-hour emergency meeting Monday evening.
How's this EU-free conference going, Cameron?


  1. Belgian Finance Minister Didier Reynders said the French and Belgium governments

    I though Belgium didn't have a functioning government?

    Have they invented one just to deal with 'the Greek problem'?

  2. @Bill, possibly, they were set to form one in mid-September