Bloomberg News

Greek Lawmakers Must Back Cuts or Risk Euro Exit, Venizelos Says

February 14, 2012

(See EXT4 for more on the euro-area financial crisis.)

Feb. 10 (Bloomberg) -- Greek Finance Minister Evangelos Venizelos pressed domestic political leaders to yield to conditions for a bailout, saying a refusal would open the way for the country’s exit from the euro.

Venizelos said his euro-area counterparts refused to approve a second aid package for Greece yesterday at an emergency meeting because the government fell short of austerity demands and because of a lack of assurances by Greek party leaders that they will stick to their commitments after elections due as soon as April. Another extraordinary assembly of the ministers was set for Feb. 15.

“From today until the next meeting of the eurogroup, our country, our homeland, our society has to think and make a definitive, strategic decision,” Venizelos, 55, told reporters after the Brussels talks. “If we see the salvation and future of the country in the euro area, in Europe, we have to do whatever we have to do to get the program approved.”

The standoff puts the spotlight on the leaders of the three Greek political parties backing the caretaker government of Prime Minister Lucas Papademos, a former European Central Bank vice president. Haggling over austerity measures between Papademos and the “troika” of the European Commission, ECB and International Monetary Fund stalled for days over pension cuts until the premier announced a “general political agreement” hours before yesterday’s Brussels meeting.

Papandreou’s Referendum

It’s not the first time the financial crisis that erupted in 2009 raised the possibility of a fracture of the currency zone. The 17-nation euro area’s rules neither permit nor foresee an exit by a member. Then-Premier George Papandreou dropped a call for a referendum on austerity last November when European leaders said it could lead to Greece quitting the euro.

Venizelos said yesterday’s euro-area gathering left no more room for political games in Greece over budget policy. The Papademos administration is backed by Socialist Pasok party led by Papandreou, New Democracy under Antonis Samaras and Laos headed by George Karatzaferis.

“There were many objections from many countries based on the fact that we didn’t fully complete in cooperation with the troika the catalogue of additional fiscal measures that must be taken,” said Venizelos, a Pasok leader. “But the main thing is that the eurogroup took serious note of the fact that there haven’t yet been written, explicit and unequivocal pledges from the leaders of all the parties of support for this program.”

Debt Swap

Greece, which faces a 14.5 billion-euro bond payment ($19.3 billion) on March 20, has since July been seeking a new aid package to follow an initial rescue of 110 billion euros in emergency loans approved in May 2010. The new program foresees a loss of more than 70 percent for bondholders in a voluntary debt exchange and extra public aid of 130 billion euros.

The Greek parliament is due to vote on the accord this weekend.

“If our homeland, our people favor another policy that necessarily leads outside the euro area and thus outside European integration, we have to say that directly to ourselves and to our fellow citizens,” Venizelos said. “Nobody can hide behind another.”

--Editors: James Hertling, Peter Hirschberg

To contact the reporter on this story: Jonathan Stearns in Brussels at

To contact the editor responsible for this story: James Hertling at

The Good Business Issue
blog comments powered by Disqus