Europe in new fight over Greece cash crunch

[Bosonic]

Source: AFP

Brussels (AFP) - European governments clashed on Tuesday over options to help debt-laden Greece meet a cash crunch in coming weeks while it waits for a tough eurozone bailout deal to be finalised.

Britain, which does not use the euro, has already said it will resist contributing to any bridge financing to get Greece through several huge payments, including 4.2 billion euros ($4.62 billion) owed to the European Central Bank (ECB) on July 20.

"Concerns were raised by several non-euro member states, this is something we will have to take into account," said Valdis Dombrovskis, the EU's vice president for the euro after meeting with European finance ministers. "Pretty much all options are quite difficult and have political, legal and financial complications," the former Latvian premier said.

British Finance Minister George Osborne rejected any attempt to use an EU-wide emergency fund, the European Financial Stabilisation Mechanism (EFSM), to underwrite bailouts of eurozone countries. "Britain is not in the euro, so the idea that British taxpayers are going to be on the line for this Greek deal is a complete non-starter," Osborne said in Brussels.

Read more: http://news.yahoo.com/eu-mulls-greece-cash-crunch-options-none-good-113114165.html;_ylt=AwrC1C3AQ6VVGGIA4o.ZmolQ;_ylu=X3oDMTByOHZyb21tBGNvbG8DYmYxBHBvcwMxBHZ0aWQDBHNlYwNzcg--

[Ghost Dog]

1. Nevertheless, UK has an interest in EU financial (& political) stability.

UK, like Germany, like others, profits from it.

[cstanleytech]

2. So hold on, there is a EU wide fund that could help which Osborne rejects using and then says

"Britain is not in the euro, so the idea that British taxpayers are going to be on the line for this Greek deal is a complete non-starter," ??? Really talk about an asshole.

[Nihil]

4. Again, it is the difference between the EURO and the EU that people are missing.

Many countries in the EU are not using the Euro.

The Greek problem is a Euro-zone issue.

The fund being discussed is a European Union issue.

If the EU fund was used to bail out Greece again then it would be
stealing from the non-Euro EU members whose taxpayers have been
feeding that fund for a genuine EU emergency, not the Euro-zone
shell game that Greece, Germany & co are playing.

I can't think of a suitable analogy in the US but the main thing
is that EURO != EU.


(Not to say that Osborne isn't an asshole because he definitely *is*
but just trying to explain that, in this particular case, he is actually right.)

[cstanleytech]

5. Yes I know but he seems to be acting like only his opinion matters on if the

fund was to be used.

[Bosonic]

6. Will the EU regret dragging the UK into Greek bailout?

Will the EU regret dragging the UK into Greek bailout?

Whatever technical fudge the EU comes up with to ensure that the UK and other non-Eurozone countries are not exposed to a Greek default via a proposed €7bn bridging loan, an important Rubicon has been crossed. The EU’s apparent willingness to renege on a political agreement only increases the domestic pressure on David Cameron to secure treaty change to underpin any UK renegotiation.

15 July 2015
Trust is a scarce commodity that will be difficult to rebuild

In 2010 and 2011, EU leaders agreed a deal that established that the EU-wide EFSM bailout fund, to which the UK is party, would no longer be used for Eurozone bailouts. David Cameron had sold this as a diplomatic victory but now, because it is the most convenient avenue to resolve an immediate Eurozone problem, that deal is being reneged on. Commissioner for the Euro Valdis Dombrovskis today made an unconvincing argument that the small print of this agreement always allowed the use of the EFSM to address the problems of a single member state but simply prevented it being used for the problems of the ‘Euro area as a whole’.

As my colleague has noted, such ‘reinterpretation’ of high-level EU agreements poses fundamental questions about ‘trust’. As the Eurozone negotiations over Greece have shown, once this is lost everything becomes much more difficult. Today’s developments are therefore a boon to those who would like to see the UK leave the EU, and for good reason. This type of political agreement, so readily jettisoned in a moment of Eurozone panic, is precisely the type of agreement Cameron may, at least in part, be relying on to secure his negotiations and sell them to the British public.

This episode will only increase the domestic pressure for the UK to secure treaty changes to underpin EU reforms – anything less will allow the No campaign to simply quote the European Commission back at the UK Government: ‘political agreements are not the same as legal agreements’. It also reinforces the general sense that everything else in the EU is at risk of being sacrificed on the altar of the Eurozone. That is not a very appealing prospect for a country that is not going to join the Euro. (If one wants to take a positive from this, it provides a practical example of and drives home the need to establish proper, legal safeguards for non-Euro member states.)

http://openeurope.org.uk/blog/will-the-eu-regret-dragging-the-uk-into-greek-bailout/#.VaZi-Cc0E94.twitter

[Ironing Man]

7. its only UK opinion that matters on what UK money is spent on...

to re-iterate the point, the fund being 'tapped into' is an EU fund, not a Euro fund - the problem is two-fold, firstly that the 'deal' agreed to keep Greece solvent was discussed by, and agreed by the Eurozone, the countries that use the Euro, not the other 9 EU countries who don't: so, in effect, you have Texas and Arizona deciding to build a road (or whatever..) and deciding that California should pay for X% of it. secondly, the UK government asked for, and recieved, a promise from the EU in 2010 that EU funds would not be used to bail out Eurozone countries.

with its normal grasp of winning friends and influencing people, the EU - or at least some part of the EU - has decided that that agreement only stands when it doesn't actually need the money. when it does need the money however, the absolute agreement becomes rather less absolute...

the UK will probably end up stumping up the cash, but the EU will have done little other to ensure that Cameron will need an absolutely stunning deal to get the UK's referendum in EU membership in 2016/17 through, and its poisoned the well over any promises of future change - the EU has shown that it treats previous agreements as negotiable when it likes.

worth noting, for those who think the EU will be well rid of the 'troublesome' UK, that the UK economy represents a full one seventh of all economic activity in the EU.

[roamer65]

3. Britain's not even in ERM2.

I agree with Osborne that they have no obligation to bailout the banks that made the Greek loans. In fact, they may have to shore up some of their own banks in the event of a Greek default. However, Britain should offer humanitarian aid to the people of Greece...as should we.