Executive Intelligence Review
Subscribe to EIR


Eurogroup Approves Bailout To Add €86 Billion More onto Greece’s Unpayable Debt Pile

Aug. 15, 2015 (EIRNS)—The Eurogroup approved the new Greek bailout deal with its harsh memorandum to add another €86 billion on to Greece unpayable debt pile. After only six hours, with no apparent death threats made against any of the participants, the Eurogroup issued a statement: "The Eurogroup considers that the necessary elements are now in place to launch the relevant national procedures required for the approval of the ESM financial assistance."

The deal has to now be approved by the German and some other national parliaments after which the first tranche of €26 billion would be approved by the European Stability Mechanism (ESM) on Aug. 19. There is already scheduled a €3.5 billion payment to the European Central Bank which holds billions in Greek bonds, while EU10 billion would be reserved to recapitalize Greek banks and the rest to meet debt payment obligations.

Of course, all is not so clear, since the International Monetary Fund is delaying its direct participation until a review in October when it has to be approved by the IMF board. IMF Managing Director Christine Lagarde, who took part in the meeting by telephone, said in a statement that Europe needs to provide "significant" debt relief to put Greece’s finances on a sustainable path. "I remain firmly of the view that Greece’s debt has become unsustainable and that Greece cannot restore debt sustainability solely through actions on its own," she said.

Eurogroup President Jeroen Dijsselbloem told reporters he was optimistic of IMF involvement but that it would be conditional on the board seeing more detail on Greek reforms after a first review of implementation of the program and an assessment that Greece’s public debt was sustainable.

However, except for these words, there was nothing concrete at all on debt relief. No one is asking the obvious question as to why make EU86 billion in new loans if you are going to give the Greeks debt relief? Not to mention that everyone knows they are unpayable.

Finnish Finance Minister Alexander Stubb at least approached the issue saying, "There’s a bit of a Catch-22 that we need to solve. The IMF wants to be involved only if there is debt relief; we want the IMF to be involved but we don’t want debt relief. Some kind of solution will have to be found."