Germany defends harsh conditions in Greece bailout

‘That is a fair offer. Europe is shouldering again more than € 80 billion,’ says German Vice Chancellor Gabriel.

Germany defends harsh conditions in Greece bailout

World Bulletin / News Desk

The German government has defended the conditional bailout deal for Greece and has urged Athens to take immediate steps for reform to ensure timely activation of the third bailout program.

“That is a fair offer. Europe is shouldering again more than €80 billion,” Germany’s Social Democrat Party leader and Vice Chancellor Sigmar Gabriel said in Berlin on Monday.

“The way ahead will be difficult, especially for Greece. But the conditions agreed last night, also by the consent of the Greek prime minister, are conditions which are necessary. Without these conditions it wouldn’t be responsible to bring forward such a huge aid program,” Gabriel said.

European leaders and Greece agreed on a conditional bailout deal on Monday, after more than 17 hours long negotiations in Brussels, with the hope of preventing the EU member state from going bankrupt, and leaving the eurozone.

The EU agreed to begin formal negotiations on a new €82 billion to €86 billion bailout program for Greece under the European Stability Mechanism (ESM), with the condition that the Greek government would pass four key legislations in its parliament by July 15, which include the streamlining of Value Added Tax, broadening the tax base, key reforms in the pension system and spending cuts.

Greek government assets will also be privatized, creating a €50 billion ($54.1 billion) fund, to be based in Athens and which will recapitalize Greek banks and invest in the country's economy.

Chancellor Angela Merkel’s spokesman Steffen Seibert said Monday that the German government would only ask for a mandate from the parliament for entering formal negotiations on the third bailout deal if the Greek government met commitments made in Brussels before Wednesday.

“First, the Greek parliament should adopt the relevant laws mentioned at the conclusions of the Euro Summit. It should also endorse all the commitments included in the document. Then the three institutions will make an assessment and verify this step. After that the German government can ask for a mandate from the parliament for entering into negotiations,” Seibert said at a press conference in Berlin.

Meanwhile, German news agency DPA reported that Merkel’s Christian Democrat bloc CDU/CSU has begun preparations for an extraordinary session at parliament on Friday for a possible vote on the third bailout negotiations with Greece.

German government had long been reluctant for a new bailout for Greece and even floated the idea of a temporary exit of Greece from the eurozone during negotiations in Brussels on Saturday.

Eurozone’s two other largest economies France and Italy strongly opposed to Germany’s “temporary Grexit” proposal.

Seibert said that the idea of a “temporary Grexit” was not the priority of Berlin, and was developed as a plan B.

“It was an idea that could be discussed in the case of a collapse in talks. And it could only be possible if Greece would have wanted that. But Greece has made it clear in the last two days that it wanted to remain in the eurozone, and we were able to develop a good compromise,” he said.

Th Greek government needs urgent finance to make payment to international creditors. According to the Euro Group, Greece needs €7 billion by 20 July and €5 billion by mid-August. 

Since 2010, the EU and the International Monetary Fund have allocated around €240 billion ($265 billion) in bailout loans to Greece.

A €245 billion ($270.5 billion) bailout program under the European Financial Stability Facility ended late last month. Greece is due to make a €3.5 billion ($3.86 billion) payment to the European Central Bank on July 20.

Güncelleme Tarihi: 13 Temmuz 2015, 17:41