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order to avert and limit macroeconomic imbalances.2 This was a step that Germany had proposed in February, to monitor economic developments across the Union in a more coordinated and efficient way. Rumour and speculation grew that France and Germany were preparing a ‘Plan B’, which might entail Greece exiting the Eurozone. Intense negotiations were taking place, to which Greece had not been invited. Greek requests for involvement in the talks were rejected. The Greeks were informed that the discussion pertained to the whole Eurozone, rather than any specific country
recognised that the need for Greek elections was legitimate, following cross-party calls for a fresh mandate. However, many members of the Eurozone believed that they were an unnecessary risk that posed a genuine threat to any resolution of the Greek crisis. There was widespread and justified concern that the elections could detrimentally affect the economy. At the beginning of May, prior to a fresh wave of measures aimed at reducing the deficit, it emerged that discussions had already begun regarding the need for yet another bailout. The ‘new package of €14.5 billion
a massive 20.18%, reached a staggering 30.8% by the end of May. Europe’s political elite were no less impatient. Angela Merkel underlined the need to continue strictly implementing the agreed reform programme. The German Minister of Finance stated that the Memorandum ‘is not negotiable’. No one ‘wants Greece to exit the Eurozone’, but ‘the choice between the parties is a choice between staying in the Eurozone or leaving it’.16 The President of the Eurogroup, Claude Juncker, appeared mildly more conciliatory in the meeting of the ministers of finance in Brussels on
152 Part III: Debt restructuring and power games In Cannes, the Greek delegation met a hostile reception. President Sarkozy and Chancellor Merkel expressed their surprise and anger as to why they had not been informed on 26 October of the Prime Minister’s intentions. They demanded that the question of the referendum be one and only one: yes or no to Greece remaining in the Eurozone. Both underlined that the matter of a referendum must be settled by 4 December, and not in January, as the Greek government had indicated. The next instalment of the bailout would be
% haircut. The report’s conclusion was that Greece needed extensive, long-term and generous international support. The provisions agreed during the July summit would not suffice. The claims of creditors would have to be cut by at least 60% if debt were to become sustainable. A further reduction in the rate of interest would be required, along with additional support from the EFSF, ‘in accordance with the promise made by the leaders of the Eurozone to help Greece throughout the whole time it will need to acquire the capacity to borrow from the markets again’. The analysis
28 Provisional solutions, October–June 2013 The initial efforts of the new coalition government to re-establish positive relations with the governments of the Eurozone were bearing fruit. Samaras’s focus on the implementation of outstanding reforms was helping improve the climate for a return to the negotiating table. At a meeting of the Eurogroup on 14 September, held in Nicosia, the ministers around the table registered the concerns of the Greek minister, but also reiterated their calls for sustained adherence to the adjustment programme and indicated that
stirring up of matters fed into and sustained the general uncertainty prevailing. Despite the decision of the Eurozone taken on 25 March, at the beginning of April it was reported that the government and the European socialist parties would be presenting a ‘more effective proposal’ for a new support mechanism, one without the IMF. A government official stated that he was not satisfied with the Brussels accord. ‘The government accepted it because it had no other choice’, Greece.indb 47 3/13/2014 1:56:36 PM 48 Part I: How we arrived at the first Memorandum but ‘an
of its part of the loan, the IMF indicated what its own contributions would be. Despite objections expressed at the meeting of its board of directors, its contribution was set at €28 billion, to be disbursed in 17 instalments (of approximately €1.65 billion each) over the next four years.2 The loan from the Eurozone and the IMF was to total €172.7 billion. On 13 March the Eurogroup finalised the terms for the release of its first instalment, of €39.4 billion. Approximately €30 billion of this was the agreed bonus in EFSF bonds, to be paid to bondholders who had
Eurozone banks not to request immediate payment of the liabilities. Rather, the debts 113 Greece.indb 113 3/13/2014 1:56:40 PM 114 Part III: Debt restructuring and power games held were to be serviced over a significantly expanded temporal framework. This was all undertaken on a voluntary basis. The Commissioner responsible, Olli Rehn, proposed a comparable solution for Greece. The ECB withdrew its absolute rejection of this proposal when the representatives of the international banking sector (the International Swaps and Derivatives Association, ISDA) indicated
the Eurozone nations would permit this. The increasingly alarming market reactions put pressure on key European nations to find ways of helping Greece. However, the perennial indecision and division within the Union continued to act as an impediment to action. Events over the following days led to intense negotiations between European nations over ‘how to help Greece to deal with its mountain of debt’. These negotiations, however, did not solely focus on Greece, but looked to address some of the wider pressing issues concerning the overall functioning of the Union