Disappointing start
November 21, 2011
Interim Greek Prime Minister Lukas Papademos was stony-faced on Monday as he emerged from his first meeting with the President of the European Commission Jose Manuel Barroso in Brussels - and no wonder. His country's future depends on whether it can fulfill its promise to international lenders to introduce a series of economic reforms.
Papademos was confident, however, that Greece would ultimately be able to meet the demands of the European Union and International Monetary Fund (IMF). "I am convinced that the new government will be able to achieve its goals in a relatively short time," he reassured.
Among the most crucial international requirements is that Greece remains in the eurozone - something which the interim premier claimed, the "overwhelming majority of the Greek people" are behind. "That's the only way forward and the only option for this government and the Greek people," he said.
Long-term commitment
But the Greek premier was unable to deliver on a crucial requirement. He has so far failed to secure a written pledge from party leaders to commit to long-terms reforms. Conservative leader Antonis Samaras has refused to sign the letter due to national sovereignty concerns.
On Monday Papademos indirectly called on him to abandon his resistance. "Our European partners and the IMF have agreed to finance Greece for a long time. They therefore expect a corresponding commitment not only from this government but also the party leaders to carry out long-term reforms."
International lenders have the right to withhold further financial assistance should they feel uncertain about Greece's commitment to enforcing austerity measures. Greece's next installment of a bailout fund worth 8 billion euros ($10.7 billion) is therefore dependent on leaders signing the written pledge - as is a new 230-billion-euro bailout package for the country. Without additional financial support, analysts predict Greece would go bankrupt within weeks.
Alternatives more difficult
Following his meeting with the Greek premier, Commission President Barroso expressed sympathy for the people of Greece in their current crisis. But he wasn't going to let them off.
"I know these are extremely difficult times for many Greek citizens," Barroso said. "I do not underestimate the pain that the necessary cuts in public spending will cause. But sometimes in life we must make difficult decisions. The alternatives are much, much harder," he added.
Despite opposition from the German government, the commission chief went on to stress the need for eurobonds, which he is now calling "stability bonds," in order to tackle the financial crisis.
Germany claims they would expose its taxpayers to the bad debt of weaker countries. But Barroso asserted they would only be launched once stricter rules on budget discipline and economic coordination were enforced in the eurozone.
"We believe that when there are appropriate levels of integration, convergence and discipline, it makes sense to have some kind of stability bonds in Europe," he said.
German Chancellor Angela Merkel's spokesman, Steffen Seibert, said the chancellor will study the commissions' proposals which are due out in detail on Wednesday.
Author: Christoph Hasselbach / ccp
Editor: Michael Lawton