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Greece Receives Billions of Euros in Bailout from the EU

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European banks agreed early on Thursday to write off 50 per cent of Greek debt. The deal was reached during an emergency summit in Brussels overnight. The EU and the IMF will also give the country another one hundred billion euros in rescue loans.

An agreement on expanding the bailout fund to one trillion euros followed immense pressure on EU leaders after multiple delays in anti-crisis action. Athens will be handed a new €100bn bailout package in early 2012.

“The Eurozone stands ready to provide additional program financing of up to €100 billion until 2014, including the required recapitalization of Greek banks,” the official communiqué reads.

As the write-off falls this time on the shoulders of private investors, the agreement guarantees them a €30 billion sweetener in exchange for the deal which will come partly from the European Financial Stability Facility (EFSF) and partly from money made by the Greek government on attempts to privatize its state assets.

“We have a voluntary agreement with the private sector, the parameters of which we have discussed with their representatives. As France has been asking from the beginning, we have excluded the possibility of a default of Greece. The private sector has written off half of the debt that it holds,” French President Nicolas Sarkozy told journalists after the summit.

The new debt reduction measures will bring Greece’s debt down to 120% of gross domestic product by 2020, experts say.

Greek banks are estimated to have the biggest capital holes on their balance sheets, Euroactiv.com wrote on Thursday. Figures from Morgan Stanley estimate that Greek banks would require over €80 billion in handouts, while Spain, Italy, France and Germany require up to €30 billion between them.

EU Commission President Jose Manuel Barroso in his turn described the agreement as “a very solid way forward,” adding that the EU’s fight against a default in Greece is more a marathon than a sprint, meaning the effect of the measures will only become apparent in a long-term perspective.

German Chancellor Angela Merkel expressed confidence that the measures agreed would solve the crisis.

“I do believe that we were able to live up to expectations, that we did the right thing for the Eurozone, and this brings us one step further along the road towards a good and sensible solution,” Merkel stated after the deal was reached.

However, not everyone thinks showering Greece with fresh cash will remedy the crisis.

“The money we have spent on Greece is lost money. I have said this since spring 2010. We should have kept Greece out of the Eurozone”, Markus Kerber, a professor of political economy at the Berlin Institute of Technology, told RT.
­Greece to nationalize some banks

­The Greek government is going to put some banks in the country under state control as part of a move to increase the capitalization of the Eurozone’s financial institutions, the Greek PM announced on Thursday.

“A number of banks will be partially nationalized. After the planned restructuring is done, we’ll open them back to the market,” George Papandreou was quoted as saying by Bloomberg news agency.

The banks in question were not named and no further details of the planned share exchange were given.

“After the deal is done, the situation with the Greek financial institutions will be clarified, and the banks will become viable and risk-protected,” Papandreou added.


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  • Rick Alexander

    When will everyone in Europe wake up to the fact that the days of entitlement gouging is over. The unions have played their last card and the only way out is by austerity measures. Politicians are exactly one thing – liars. They will promise the world in exchange for their souls. And it is not just Europe. Look at the USA under Obama. Obama is incompetent, he has never run a business and couldn’t even run a McDonald’s franchise, yet he pretends to be managing the USA economy. He is Commander of Mismanagement. Europe’s leaders better get their act together and implement severe austerity measures or face economic annihalation.
    Take for example what the unions tried to do to Qantas Airlines in Australia. Well, the CEO of Qantas kicked the unions and the government into their teeth when he groiunded the airline globally. That got the Gillard government to back off with their union buddies to save their sorry political butts. So Europe, it is a case of austerity or collaps, which will it be?

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  • Matej

    Well, it is not so easy to “wake up.” Problem is, that “United Europe” or “United States of Europe” is not will of us, its citizens (it is the same for British, Germans or for exmp. Slovaks). Eurocrats make our politicians give them many or most of competences which belongs to our national states without vote or refferendum. And they do it (of course). We cannot do anything. It is so in whole Europe.

    It is the same as in the USA. People want to real change but, I am afraid, there will never go such a change. Because of “people behind scene.”

    I am a Chrisitan and I begin to believe, that we really live in the end of the times. So … we will have only one savior – lord Jesus.

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