August 19, 2022

Europeans Accept New Greek Bailout

“We have agreed that there will be a new program for Greece,” Angela Merkel, the chancellor of Germany, told reporters at the end of a two-day meeting in Brussels. “This is an important decision that says once again we will do everything to stabilize the euro over all.”

The comments came a day after Greece agreed with international creditors to more austerity measures as part of revised plans for 2011-15 aimed at plugging a gap in its future financing.

If the Greek Parliament approves this proposal next week, the European Union and the International Monetary Fund will release a 12 billion euro ($17 billion) tranche of emergency aid, and then put together a second rescue.

The shape and size of the new bailout could become clear at a meeting on July 3 of euro zone finance ministers in Brussels.

All this comes a little more than a year after the government in Athens won a package of loans worth 110 billion euros.

“Greece is supported,” President Nicolas Sarkozy of France said at a news conference. “Europeans trust the Greek authorities and Parliament in their endeavors to implement the bold measures that have been decided.”

After discussions with the Greek prime minister, George Papandreou, European leaders expressed confidence that Greece’s Parliament would approve the austerity package, which has already prompted large protests in Athens.

Changes to the plan, negotiated with European and I.M.F. officials Thursday, are certain to make it even less popular among Greek citizens.

The new austerity program will now include a one-time levy on personal income ranging from 1 to 5 percent, depending on income.

Meanwhile, the tax-free threshold on income will be lowered to 8,000 euros a year from 12,000 euros, with the lowest rate set at 10 percent — but with exemptions for people up to 30 years old, pensioners older than 65 and the disabled. There will also be an annual levy of 300 euros on the self-employed.

On Thursday, at a meeting of center-right parties in Brussels, the Greek opposition leader, Antonis Samaras, refused to bow to pressure to change course and support the new plan during next week’s vote. During the discussion, Mr. Samaras was warned that Europe was engaged in a war for its economic stability, according to one official who spoke on the condition of anonymity.

Reflecting the disappointment of European leaders at Mr. Samaras’s stance, Mrs. Merkel said that “it would be better to have the widest support.”

She also insisted that any new program for Greece should be monitored closely. “One needs to do a reality check on whether the assumptions are proved right,” she said.

Nonetheless, in a statement issued late Thursday, European Union leaders accepted the need for a “new program jointly supported by its euro area partners and the I.M.F.”

That could amount to as much as 120 billion euros, though no figures have been identified yet because euro zone countries are negotiating with private investors to determine their level of voluntary contributions.

After the meeting, Mr. Papandreou conceded that his country was on a “difficult path” but one that was “much better than the alternative path of defaulting.”

“I believe that this is something which is understood by the majority in the Greek Parliament,” Mr. Papandreou said, adding that he was sure that the 12 billion euros in emergency aid would be released next month.

At the summit meeting, an obstacle to the new rescue was removed when the leaders agreed that nations that do not use the euro would not be obliged to contribute through a fund that they finance along with countries that use the single currency.

Britain objected to taking part, arguing that it had not participated in last year’s Greek package and had no plans to join the single currency.

“For Britain, we weren’t involved in this bailout and we should not be involved, as a noneuro country, in anything that might happen subsequently,” David Cameron, Britain’s prime minister, said at a news conference. Some practical difficulties remain, including an insistence from Finland that any new loans to Greece should be guaranteed by collateral.

James Kanter contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=94153d5dcca328f96d46a003775d562c

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