Ireland, Sweden Join Chorus of Countries Seeking Austerity for Greeks

|
 |  Includes: EWD, EWG, EWP, EWQ, EWU, FXE, IEV, VGK
by: Edward Harrison

I wanted to highlight a few articles on Greece below. Due to time constraints, I cannot translate this Dagens Nyheter article (Borg tror inte Greklands plan räcker – DN.se). But the general gist is one of Sweden’s premier Borg supporting austerity for Greece and the IMF as an agent to ensure this.

If you look at the Irish Independent article on Irish finance minister Brian Lenihan’s comments about Greece (Lenihan offers advice to Greeks on cutting deficit – Independent.ie), it is clear that the Irish are pushing for austerity measures as they have already taken their own.

Earlier in the week, I wrote that the Dutch have joined the Germans in rejecting a bailout of Greece. So, this makes it clear that there is widespread opposition to any bailout of Greece. And should any ‘support’ occur at all it would be done with massive strings attached.

The EU’s no bailout rule that is applicable to Greece is in Article 103, section 1:

The Community shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of any Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project. A Member State shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of another Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project.

However, increasingly I am hearing chatter that, in crisis, there is a superseding section, Article 100, section 2:

Where a Member State is in difficulties or is seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control, the Council, acting by a qualified majority on a proposal from the Commission, may grant, under certain conditions, Community financial assistance to the Member State concerned. The President of the Council shall inform the European Parliament of the decision taken.

So, my best guess here is that the doves – which seem to include German Chancellor Merkel – are looking for ways to apply emergency support as described in Article 100, section 2 above.

However, others are very much against this. The Irish definitely want the Greeks to be forced to take the same kind of measures they have done. The Swedes and the Brits do not want to pay for a Eurozone calamity when they are not even part of the Eurozone. And deficit hawks are against a bailout on principal alone.

I still believe the Greeks' getting a bailout at all is a tall order given the internal politics for the socialist government there which prevent austerity. The IMF as bad cop – which Borg seems to be pushing – still looks to be a good option