Archive for June, 2012
Since the eurozone crisis erupted in late 2009, there have been 18 Brussels summits. Here is what was said after the main gatherings:
February 11 2010 Greek prime minister George Papandreou: “We are willing to take all the reforms that are necessary to change the way the public sector is working in Greece.”
German Chancellor Angela Merkel:
“We know our responsibility for the stability of the euro zone and we belong together. Rules have to be respected, however. Greece did not ask us for any money today.”
French President Nicolas Sarkozy:
“We have delivered a very clear political signal: Greece is part of the European Union, of the euro zone, and we will support it.”
March 25-26 2010 Announcing plans for a bailout, then ECB president Jean-Claude Trichet says: “I think it’s a workable solution. I am confident the mechanism decided today will normally not need to be activated and that Greece will progressively regain the confidence of the market.”Portugese Prime Minister Jose Socrates -
“We hope it will not be necessary, because speculation is based on doubt and this accord gives some certainty to the market.”
“It is not about paying Greece’s debt but giving a signal that we are there to support them if necessary.”
Latvian Prime Minister Valdis Dombrovskis -
On help for Greece:
“Certainly I would expect a decision and it seems that the ideas are going towards having a package of bilateral loans and IMF loans. Bilateral loans as an instrument do not contradict the (EU) treaty so it is also sound from a legal point of view.”
How soon could it be?
“It has to be relatively quick. It is a matter of weeks, I would say.”
May 7 2010 Greece accepts a €110bn loan. EU monetary affairs commissioner, Olli Rehn, says the agreement “proves that we shall defend the euro whatever it takes. We are facing such exceptional circumstances today and the mechanism and the mechanism will stay in place as long as needed to safeguard financial stability.”. Finnish leader Matti Vanhanen says: “If the domino effect begins, no economy is safe.””We have asked the commission and the council to strictly enforce the (budget) recommendations addressed to member states,” leaders said in a joint statement.
June 17 2010 “I think we should encourage Spain that it is on the right track,” says Angela Merkel.
September 17th Summit:
Thursday’s European Union summit, which was meant to have focused on how the bloc could best engage with the outside world, was overshadowed by France’s expulsion of members of the Roma community. President Nicolas Sarkozy maintained, “Our argument is sound.”
October 27th-28th Summit:
“It is true that a Franco-German agreement is not everything in Europe. But without a Franco-German agreement, not much is possible,” Merkel said, German chancellor.
“Compared to the current situation,” European Council President Herman Van Rompuy told a press conference, “sanctions [on states that do not keep deficits in check] will kick in earlier and progressively. Public debt will be taken more into account alongside the deficit criteria. Sanctions will be possible before the 3-percent annual deficit is reached if not enough preventive action is taken.”
December 16 2010 Leaders agree to set up a permanent rescue fund, the European stability mechanism (ESM) after weeks of wrangling over the future of the euro, which also saw Ireland take a €65bn bailout. Herman Van Rompuy, president of the European Council, says: “The euro area leaders also underlined that we have a joint economic strategy and a political will to do whatever is required to ensure the eurozone’s stability.”German Chancellor Angela Merkel, after the summit, said the ESM was an expression of all-round solidarity. She also said 2011 will be a year of reform for a good number of euro zone countries.
4 Feb 2011 The one-day summit accepts Europe is not on track to meet its target for reducing energy use by 20% by 2020.
The post-summit accord says: “The EU and its member states will promote investment in renewables and safe and sustainable low carbon technologies.”
Greenpeace, the leading environmental group, says it is “disappointed there was no progress on binding energy efficiency targets ‘for now’, despite common agreement that the EU is failing in its ambitions”.
11 March 2011 The summit takes a surreal turn when French president Nicolas Sarkozy and UK prime minister David Cameron leave the other 25 EU leaders hanging around while they discus options against Libyan dictator Muammar Gaddafi.
24-25 March 2011 A summit to finalise Germany and France’s six-point solution to the euro crisis is derailed by the fall of the Portuguese government.
The Spanish prime minister, José Luis Rodríguez Zapatero, says he does not fear contagion from Portugal despite their close economic ties.
Merkel says: “This is a comprehensive package which I think is a big step forward. Whether it will be sufficient, only time will tell.”
June 23-24 2011 EU leaders agree the outline of a fresh €120bn bailout subject to more austerity, sending stock markets soaring. Eurogroup boss Jean-Claude Juncker urges Athens to meet its commitment. “All conditions must be met,” he says. “You can’t let anyone believe there is a plan B. If Greece does what it has to do, we will do what we have to do.”
21 July 2011 More details emerge of a further Greek bailout. Sarkozy hails it as a “historic moment”.
26 October 2011 Private sector involvement in the latest bailout is agreed. Charles Dallara, director of the Institute of International Finance, which represented the private sector in the talks, says: “We look forward to working with the Greek and European authorities to translate this framework into a concrete agreement that can deliver an early reduction in Greece’s debt and place it squarely on a path toward debt sustainability.”
8-9 -World Bank President Robert Zoellick said “It’s a very welcome and an important step because we have seen the ripple effects.”
-“I compliment the leaders of the European Union for facing and making difficult decisions. Of course problems like this can’t be solved by waving a magic wand, and the implementation of the three core elements will require follow through to ensure that with the market reactions, the banks can function more effectively and to ensure that euro zone countries are able to roll over their debt.”
December 2011 Cameron vetoes EU-wide treaty changes, saying they are not in Britain’s interests, “so I didn’t sign up to it”. “This is a breakthrough to a union of stability,” says Merkel. “We will use the crisis as a chance for a new beginning.”
“It’s going to be the basis for a good fiscal compact and more discipline in economic policy,” says Mario Draghi, new boss of the ECB.
“It was a tough decision but the right one,” said the prime minister. -Boris Johnson said: “David Cameron has played a blinder and he’s done the only thing that it was really open for him to do… I understand the argument in favour of these measures because everybody’s desperate to save the euro, but they would just mean a quite unacceptable loss of national sovereignty.” -Mr Hague said the move was “very sensible” and signing up would have meant a loss of national sovereignty.
1 March 2012 Fiscal pact agreed in December is signed, except by the UK. Van Rompuy says: “This stronger self-constraint by each and every one of you as regards debts and deficits is important in itself. It helps prevent a repetition of the sovereign debt crisis. It will thus also reinforce trust among member states, which is politically important as well.” Leaders of eurozone countries agreed to allocate funds faster for the EU permanent bailout fund.
Compiled by Emily Talbut and Joe Allen
Following is a timeline of Europe’s
debt crisis from the signing of the Maastricht Treaty to today’s
1991 Dec. 10: Maastricht Treaty agreed, setting up an “irrevocable” monetary union without a central finance ministry or a mechanism to leave the euro. 1992 16 Sept: Europe’s Exchange Rate Mechanism blown into disarray when the U.K. is forced to exit the currency regime, a precursor to monetary union. Billionaire George Soros reportedly makes $1 billion selling the pound. Italy later exits and the Spanish peseta, Portuguese escudo and Irish punt are devalued. 1996 Dec. 13: In the absence of a euro finance ministry, EU leaders consent to a German-inspired “Stability Pact” designed to impose financial penalties on countries that overstep deficit limits. 1998 March 14: Greece enters the ERM. 1999 Jan. 1: Euro established with 11 founding members. 2001 Jan. 1: Greece enters euro region. Greek 10-year bonds yield 5.36 percent, Spanish 10-year bonds 5.09 percent and Italian 10- year bonds 5.16 percent. Germany’s 10-year bund yields 4.85 percent. 2003 Nov. 24-25: Germany, France override EU budget rules after saying they expect to exceed the EU’s 3 percent deficit limit for a third year. Spain, Netherlands, Finland and Austria object. 2005 March 20: EU finance ministers bow to German pressure to relax deficit rules. 2008 Sept. 15: Lehman Brothers files for bankruptcy, triggering worldwide market panic. Sept. 30: Ireland guarantees all deposits and most debt liabilities of its banks. Irish 10-year bonds yields 4.590 percent. 2009 Jan 14: SP cuts Greece to A- from A. The rating company cites the country’s weakening finances as the global economy slowed. Greek 10-year bond yields rise to 5.43 percent the next day. Oct. 4: George Papandreou leads Socialist Pasok Party to landslide victory in Greek elections, beating New Democracy by the widest margin since 1981 on pledges to boost spending and wages. Oct. 20: New Greek Finance Minister Papaconstantinou says deficit will balloon to 12.5 percent of GDP in 2009, more than double the previous government’s forecast. Yield on Greek 10- year bond 4.58 percent. Oct. 26: Former head of Greek National Statistics Service says his body “holds no responsibility” for the revision of deficit figures since 2008. Nov. 5: Papandreou announces first budget. The plan aims to trim the deficit to 9.4 percent GDP in 2010. Dec. 16: SP Cuts Greece to BBB+ from A-, three steps above junk. 2010 Jan. 14: Greece adopts three-year plan to bring the European Union’s biggest budget deficit within the EU limit in 2012. The same day, ECB President Jean-Claude Trichet said Greece won’t win any special treatment from the central bank. Jan. 21: Papaconstantinou says Greece won’t need a rescue package. The yield on Greece’s 10-year bond reaches 6.248 percent, a euro-era high. Jan. 29: EU Commissioner Joaquin Almunia says in Davos there is no ‘Plan B’ for Greece. “Greece will not default. In the euro area, default does not exist.” Feb. 2: Greek government announces austerity package to get deficit to 3 percent of GDP in 2012. Feb. 11: EU leaders hold first emergency summit on Greece. EU agrees to take “determined and coordinated action” to protect financial stability of euro area, without giving further details. Feb. 15: Papaconstantinou says “we are basically trying to change the course of the Titanic. People think we are in a terrible mess. And we are.” March 16: Euro-region finance ministers lay groundwork for making emergency loans available to aid Greece. SP affirms Greece BBB+ rating and takes it off Creditwatch negative. Papaconstantinou says the EU needs a “loaded gun” to fend off speculators. March 18: Papandreou calls on EU partners to come up with specific aid measures within a week to help Greece, hints he might seek support from IMF if EU partners don’t act. March 26: Head of Greek debt agency says rescue deal “wipes out the risk of default.” April 8: Greece’s 10-year bond yield reaches 7.4 percent, pushing the spread on German bunds to a euro-era high of 442 basis points. April 12: Euro-area finance ministers agree to provide up to 30 billion euros of loans to Greece over the next year with the IMF agreeing to put up another 15 billion euros in funds. April 21: Greece, facing 8.5 billion euros in bond redemptions the following month, begins talks with the EU, the ECB and the IMF on conditions tied to 45 billion-euro in aid. April 22: The EU revises Greece’s 2009 budget deficit to 13.6 percent of GDP, higher than the government’s previous forecast of 12.9 percent. Ireland overtakes Greece as the EU nation with the largest deficit with its shortfall revised to 14.3 percent. Moody’s cuts Greece one level to A3. April 23: Papandreou asks EU for a 45 billion-euro bailout from the EU and IMF, calling it a “a new Odyssey for Greece.” “But we know the road to Ithaca and have charted the waters,” he added, referring to the return of mythological hero Ulysses to his island home. April 27: SP becomes first rating company to cut Greece to junk, downgrades Portugal to A-. May 2: Euro-region agrees on a 110 billion-euro rescue package for Greece. Greece agrees to 30 billion euros in austerity cuts over the next three years in exchange for the aid. May 3: The ECB says it will indefinitely accept Greek collateral regardless of the country’s credit rating. May 5: Protests in Athens against the government’s austerity plans turn violent and three people are killed when they become trapped in a bank set ablaze by demonstrators. May 6: Greek Parliament approves deficit cuts. Greek 10-year yields reach 12 percent the next day. May 7-8: European leaders agreed to set up an emergency fund to stem the sovereign crisis and said the workings of the financial backstop will be hammered out before the markets open May 10. May 9-10: EU finance chiefs, in a 14-hour overnight session in Brussels, agree to set up a 750 billion-euros rescue mechanism for countries facing financial distress and the ECB said it will buy government and private debt in the biggest attempt yet to end the sovereign-debt crisis. The meeting gives birth to the European Financial Stability Facility, the region’s temporary bailout mechanism, with initial capital of 440 billion euros. May 18: Greece receives its first bailout loan for 14.5 billion euros, one day before 8.5 billion euros in bonds come due. June 23: Greek 10-year bond yield closes above 10 percent for first time in euro’s history. June 14: Moody’s cuts Greece to junk. July 13: Greece returns to bond markets for first time since bailout, selling 1.62 billion euros of six-month bills. Oct. 4: Greece announce draft budget plan to cut the deficit to 7 percent of GDP in 2011. 2011 Jan. 14: Fitch follows SP and Moody’s in cutting Greece to junk. March 11: EU summit agrees to expand powers of EFSF to allow it to buy debt in primary markets and tap its full 440 billion euros in firepower. EU also reaches preliminary agreement to cut the rates on emergency loans to Greece by 100 basis points for first three years and extend maturities of the loans to 7.5 years. April 15: Papandreou announces 76 billion euros of austerity measures, later increased to 78 billion euros, running through the end of 2015. The program pledged to raise 50 billion euros from state asset sales and aims to cut the budget deficit to 1 percent of GDP in 2015. May 6: Finance ministers from Spain, France, Germany and Italy hold unannounced meeting in Luxembourg that prompt press reports that Greece will leave the euro. Trichet walks out, refusing to attend any meeting that discusses Greek haircuts. Luxembourg Prime Minister Jean-Claude Juncker, who chairs finance ministers’ meetings, says possible further aid for Greece was discussed. May 9: SP cuts Greece two levels to B from BB-, threatens further cuts. May 13: EU publishes new debt and deficit forecasts and predicts that Ireland, Portugal, Greece will all have debt of more than their total GDP in 2011. May 17: European finance ministers for the first time float the idea of talks with bondholders to extend Greece’s debt-repayment schedule. May 24: Greece announces details on additional 6 billion euros of 2011 budget cuts and a plan to speed asset sales. ECB governing council member Christian Noyer says Greek restructuring would be “horror story.” May 27: Greek Cabinet passes another 6 billion euros in austerity measures and gives some details on planned assets sales. June 7: EU Monetary Affairs Commissioner Olli Rehn says June may be the “beginning of the end” of the crisis. June 13: SP Cuts Greece to CCC, the lowest rating for any country it reviews in the world. June 15: Papandreou announces Cabinet reshuffle and confidence vote. June 17: Papandreou appoints Defense Minister Evangelos Venizelos to replace Papaconstantinou as finance minister. June 22: Papandreou survives confidence vote in his government. June 30: Greek lawmakers approve the 78 billion-euro austerity plan after two votes in two days marred by violent protests outside parliament. July 21: EU summit passes second bailout package for Greece and agrees to expand the powers of the EFSF. Bankers agree to take losses of 21 percent on the net present value of their Greek bond holdings. Aug. 16: Finland and Greece strike agreement on collateral to guarantee bailout contributions. The agreement was opposed by other euro members such as Austria and the Netherlands and had to be re-negotiated. Sept. 2: Inspectors from the European Union, European Central Bank and International Monetary Fund suspend Greece’s fifth review after finding delays in the implementation of the medium- term fiscal plan and structural economic reforms. Spain adds budget-discipline amendment to constitution, the second change in its 30-year history. Sept. 11: Papandreou approves new emergency measures to plug a gap in the budget for 2011. Oct. 2: Greece’s government approves the draft budget for 2012, which targets a deficit of 8.5 percent of gross domestic product, and announces it will miss revised deficit target for 2011. Oct. 11: Troika releases statement on fifth review of Greek economy and suggests the sixth tranche of the bailout payments worth 8 billion-euro will be paid. Oct. 21: Papandreou wins parliamentary approval of latest austerity bill, which includes wage and pension cuts and plans to lay-off 30,000 state workers. His majority falls by one lawmaker to 153 after he expels Louka Katseli for voting against one of the articles. EU, ECB, IMF issue draft sustainability report on Greece saying debt dynamics remain “worrying.” Oct. 23: European leaders say a summit on the euro crisis won’t produce decisions and set another meeting for Oct. 26. Greek 10- year yields trade at 25 percent. Oct. 26-27: EU leaders hold 14th crisis summit in 21 months. After more than 10 hours of talks, leaders agreed to leverage the EU’s temporary bailout fund to boost its firepower to 1 trillion euros, force private investors to accept a 50 percent haircut on Greek bonds, push European banks to raise 106 billion euros in new capital, and extend a new aid package worth 130 billion euros for Greece. Oct. 31: Papandreou stuns EU politicians and Greek lawmakers by calling a referendum on the second bailout agreement. MF Global Holdings Inc. declares bankruptcy after bets on sovereign debt backfire. Nov. 1: Stocks and bonds plunged worldwide on concern an unsuccessful referendum will push Greece into a disorderly default. The yield on Greece’s two-year bond rises to a record 84.7 percent. Draghi succeeds Trichet as ECB president. Nov. 2: European leaders cut off aid payments to Greece and say Greece must decide soon whether it wants to stay in the euro. The ultimatum is at odds with the Maastricht Treaty’s assertion that monetary union is “irrevocable.” Nov. 3: Papandreou backs down on euro referendum. Nov. 6: Papandreou agrees to step aside to make way for a government of national unity. Nov. 11: Lucas Papademos, a former ECB vice president is sworn in as prime minister of a Greek unity government. Dec. 5: SP puts Germany, France and 13 other euro-area nations on review for a downgrade. Dec. 8: The ECB cuts its benchmark rate back to a record low of 1 percent and offers banks unlimited cash for three years. It also eases collateral rules. Dec. 9: Leaders complete all-night talks in Brussels on a “fiscal compact,” sparking a split with the U.K. Euro governments add 200 billion euros to their crisis-fighting war chest, tighten rules to curb future debts and speed the start of a 500 billion-euro permanent rescue fund to next year. Draghi welcomes the decisions, without signaling any willingness to step up bond purchases. Greek 10-year bond yield at 32 percent. Italian 10-year bond yield at 6.47 percent. Spanish 10-year bond yield at 5.77 percent. German 10-year bond yield at 2.07 percent. 2012 Feb. 17: The ECB swaps Greek bonds purchased under the SMP for new ones to ensure it isn’t forced to take losses in a debt restructuring. Feb. 21: Euro-area finance ministers reached agreement on a second bailout package for Greece. The deal includes a 53.5 percent writedown for investors in Greek bonds. Feb. 25: Greece formally asked investors to exchange their holdings of government debt for new securities in the biggest sovereign restructuring in history. The bonds subject to the invitation had a total face value of about 206 billion euros. Feb. 27: Greek credit rating cut to “selective default” by Standard Poor’s. March 1: Greece’s parliament completes vote on cuts needed for bailout. March 2: EU leaders declare end of financial crisis, turn attention to growth. March 9: Greece reaches target in debt restructuring with 95.7 percent participation rate among investors. May 2: Standard Poor’s removes selective default, rates Greece CCC. May 6: Greece holds elections with anti-bailout party Syriza finishing a surprise second to New Democracy’s Antonis Samaras. May 7: Samaras fails to form coalition. May 9: Syriza’s Alexis Tsipras fails to form coalition. May 11: Tsipras rejects proposed unity government. May 15: Coalition talks fail, leading to new elections. June 17: Greece votes.
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Greece is in urgent need of a “pro-European” government that will navigate the country through its worst crisis in modern times, the former prime minister George Papandreou said two days before an election that has the world on tenterhooks.
As Greeks prepare to cast votes in a poll that has pitted anti-austerity parties against “pro-bailout” forces who have pledged to do whatever it takes to keep the debt-stricken nation in the eurozone, Papandreou warned that Europe would also have to “step up to the mantle” by taking a different approach to the country.
“I hope for the victory of pro-European parties that can create a stable coalition and therefore look at how we can ameliorate the austerity measures,” he told the Guardian. “That would most likely entail extending the [EU-IMF] programme and the extra time would mean we would need more money.”
With the eyes of the world firmly fixed on what happens in Athens on Sunday, the conservative New Democracy leader Antonis Samaras ended an electric campaign telling Greeks that the elevation of the far-left Syriza party to power would mean “catastrophe” for the country.
In the northern city of Thessaloniki, Alexis Tsipras, who heads Syriza, said continued adherence to the arduous terms of the international loan agreement propping up the Greek economy would “mean bankruptcy” for a nation now on its knees.
In one of the many ironies of a crisis that has shifted the political landscape of Greece, the socialist Papandreou now finds himself in effect supporting Samaras, a long-time political opponent, to ensure Greece remains in the single currency.
While political co-operation in a country more divided than most is now crucial – in a ballot in which no party is likely to win an outright majority – so, too, is the need to stop the “patchwork” approach to solving the crisis, he said.
“We need certainty and we need a clear path and that is not something the Greeks alone can do. Europe also has to take up the mantle,” said Papandreou, the first leader to lose his post to the debt drama when he was forced to step aside in November.
“Every step [along the way] we’ve been patching up the problem. The patchwork has to end.”
While secret data released by private polling companies have shown the conservatives to be marginally in the lead, the election – which comes in the wake of an inconclusive ballot on 6 May – has been fraught with tension partly because of “simplistic stereotyping” on the part of Europe.
In recent weeks Greeks have seen a marked rise in violence not least at the hands of the neo-Nazi Golden Dawn party also projected to win seats in the 300-member parliament.
But since the crisis erupted in Athens within months of his government assuming office in late 2009, Papandreou said his compatriots had been persistently portrayed as profligate and lazy when the problem was as much about the country’s structural flaws as the inherent weaknesses in a monetary union whose “architecture is incomplete”.
“There has been a lot of stereotyping. We have become the point [of reference] for every analyst who wants to prove his or her thesis about the world economy,” said the politician.
“It’s very easy to say that Greece is the problem but we have seen again and again that there is a risk in the system.
“What Greece is facing is what we will see in other countries in Europe. We are only a mirror image of the problems that may occur.”
In the drama that has now brought the nation to the brink of economic, social and political collapse, the US-born Papandreou is often viewed as a tragic figure; a man who, though well-intentioned, ultimately failed in his undertaking to turn Greece from an economic basket case into a vibrant, modern European state.
For his critics the seeds of demise were sown in his inability to rid his own Pasok party of the old-style politicians who kept reform at bay – and his decision in May 2010 to resort to the EU and IMF for rescue funds at great personal cost to ordinary Greeks.
For his supporters, the crisis was simply too big; it catapulted the country into unchartered waters that no man could survive.
In November Papandreou was forced to step aside, making way for an emergency government of “national unity” headed by the technocrat economist Lucas Papademos.
In March he was forced to give up the leadership of Pasok, the party his father had founded out of an anti-junta group after the collapse of military rule in 1974.
Seated behind a large mahogany desk in the quiet of his parliamentary office, the 59-year-old politician admits he has felt a “rollercoaster of emotions.”
“There have been high points and low points,” he says. “But anger is not a good guide. We need to look forward in a calm manner.”
Papandreou insists that, as prime minister, he did “what was humanly possible to keep Greece above water.”
In his nearly two years in office he secured the biggest financial bailout “in history” for Athens with a total €340bn (£220bn) being committed to the country in return for austerity and structural measures that, in many cases, were long overdue. But while there was “the will”, Greece, he claimed, lacked the capacity to implement such change.
“I said from the very beginning to the European commission, the International Monetary Fund and the European Central Bank [the "troika" of creditors propping up the economy] that while we have the will, we don’t have the administrative ability [to enforce such measures],” he said.
“We had to use Google Earth to locate pools, we had to use electricity bills to tax property as we did not have a civil service capable of doing such things.”
It took a year before the EU agreed to assign a special task force to Athens to help deal with the problem.
In the same vein, the German chancellor Angela Merkel miscalculated the role of the markets, instead believing they would “behave logically.”
“I came to believe, and believe even more today, that no matter what Greece did the markets would not leave it alone until Europe looked at its own [internal] contradictions.”
It is not lost on Papandreou that Sunday’s make or break vote is being regarded as a referendum of the desire of Greeks to remain in the eurozone.
In a giddying series of events the politician was forced to stand down after his bombshell decision last October to call a referendum on the unpopular terms of the bailout package agreed by the EU and IMF.
“From the summer of 2011 we had been talking about a referendum,” he said revealing that both Angela Merkel and the then French president Nicolas Sarkozy were fully aware of his plans to put the accord to popular vote.
“They understood that I was moving ahead with a referendum and they agreed with it,” said Papandreou, adding that if a plebiscite been held at the time it would have removed the uncertainty that has come to haunt Greece and Europe.
• The standfirst on this article was amended on 17 June 2012. The original standfirst erroneously suggested that George Papandreou was giving his support to Antonis Samaras.