EU To Support Second Greece Bailout

Leaders of the 27-member European Union Thursday night agreed on a second financial assistance for Greece but on condition that the debt-ridden country implements a programme of severe austerity measures. They issued a joint statement calling on EU Finance Ministers to complete work on outstanding elements of a second bailout to allow the necessary decisions to be taken by early July.

The statement noted that the request by the Greek government for a loan “will provide the basis for setting up the main parameters of a new programme jointly supported by its euro area partners and the IMF .”

“A comprehensive reform package and adoption by the Greek Parliament of the key laws on the fiscal strategy and privatization must be finalized as a matter of urgency in the coming days,” they stressed.

The Greek parliament is expected to vote next Tuesday on a new package of austerity measures in order to get the next instalment of 12 billion euro from a 110 billion euro bailout it received from the EU and the IMF last year to save the country from bankruptcy. The statement gave no figures of a new loan but economists say Greece needs a further 120 billion euro over the next two years to avoid default.

Speaking at a late night press conference, EU President Herman Van Rompuy said the leaders agreed that required additional funding for Greece “will be financed by both official and private sources.”

The statement called on all political parties in Greece to support the government measures and stressed that national unity is a prerequisite for success.

The unpopular austerity programme including pay cuts, tax increases and privatisation of state companies are aimed at saving 28 billion euros for the Greek state. But the painful measures have led to widespread strikes and protests in the country.

Under the bailout conditions agreed with the EU and the IMF, Greece was supposed to privatize 50 billion euro worth of public utility companies, but not one has been privatized till now.

For his part, European Commissions President Jose Manuel Barroso told the joint press conference that “there is a real will of the European Union to do what is necessary to preserve the financial stability in the euro area and to work together with our Greek partners and to work for reinforced European governance.”

The EU leaders welcomed progress made in Ireland in the implementation of its reform programme, and the strong commitment by the newly elected Portuguese government to fully implement its programme of reforms.

Ireland and Portugal are two other euro zone members which have received massive bailouts from the EU and the IMF.

In their meeting on Friday, EU leaders will assess implementation of migration policies and discuss developments in the southern Mediterranean, focusing on Libya, Syria and the Middle East peace process.

They are also expected to call for EU membership negotiations with Croatia to be concluded by the end of June and nominate Italian banker Mario Draghi as the future President of the European Central Bank.