Europe must stop stalling and agree on debt relief measures for Greece on June 15 to revive the only euro zone economy still in recession, European Central Bank board member Benoit Coeure said on Tuesday. Coeure, a key ally of ECB President Mario Draghi, weighed forcefully into the debate pitting Greece against countries like Germany and the Netherlands in the run-up to a mid-June meeting of euro zone finance ministers.
He backed Greek Finance Minister Euclid Tsakalotos in arguing that Greece had done what was asked of it under its current bailout programme and that withholding a debt deal would create economic damage by thwarting investment.
The Dutch and Germans are reluctant to give Athens any further aid, arguing that a debt deal should be done when it is actually needed, perhaps years down the road, and not now.
“Discussions are ongoing, but in my view it is important that an agreement is reached at the Eurogroup meeting on 15 June,” Coeure told a conference.
He said the ball was in the court of European leaders, who only harm Greece if they delayed further.
While haircuts on Greek debt are not under consideration, some reprofiling is possible to lengthen and smooth maturities. Swapping more expensive IMF loans for cheaper debt is also under discussion.
Coeure said that if the meeting agreed sufficiently clear measures, to be implemented after the bailout deal is completed next year, this would allow the ECB to consider including Greek bonds in its asset purchase programme – a Holy Grail for Athens, as it would allow it to return to international debt markets.
Greece has about 7 billion euros of debt maturing in July, a sum it will not be able to repay unless it gets new loans under its current bailout worth up to 86 billion euros – the third aid programme since its crisis began.
Speaking alongside Coeure, Tsakalotos argued that euro zone officials had a moral obligation to act given that Greece had done its share of the deal and German demands to have the IMF on board but delay debt relief were mutually exclusive.
He was critical of the IMF for taking too long to decide whether to take part in the bailout.
“What we’re asking of the IMF is clarity,” Tsakalotos said. “We’ve only got 14 months of a programme to go. It seems to me that it’s time for the IMF to make up its mind on what it wants to do and what it thinks needs to be done.”
Lending Greece some support, European Economic and Monetary Affairs Commissioner Pierre Moscovici said he would do everything to conclude Greece’s bailout review as soon as possible.
“We’ll continue in the name of the Commission to stress that all players act responsibly with Greece’s 11 million people in mind,” Moscovici told the conference in a video message.
Resistance from Germany, where a portion of public opinion fears ending up footing the bill for indebted euro zone countries, has been a main stumbling block to agreeing on debt relief for Greece.
German Finance Minister Wolfgang Schaeuble made no reference to debt relief in a welcome message printed in the programme of the event, merely saying the bailout review needed “to be completed quickly” to restore trust in Greece.
He argued, instead, that carrying out agreed reforms was the best way for Greece to get back on its feet.