Germany and the European Commission welcomed Greek approval of the austerity steps demanded for a financial lifeline, suggesting euro finance chiefs will pull Greece back from the brink when they meet in two days.
Euro-area finance ministers will convene in Brussels on Feb. 15 for the second extraordinary meeting on Greece in a week, after they declined to ratify the 130 billion-euro ($172 billion) package in a special session on Feb. 9. Frustrated after two years of missed budget targets, finance chiefs demanded Greek officials put their verbal commitments into law.
The vote in Athens “shows the will and the readiness of the Greeks to undertake major efforts of their own, including tough cuts to put their country on a good path,” Steffen Seibert, German Chancellor Angela Merkel’s chief spokesman, told reporters in Berlin today. “Greece’s European partners welcome this; certainly Germany does.”
Global stocks and the euro rose after the Greek parliament passed the legislation in the early hours of today as rioters battled police and set fire to buildings in downtown Athens. EU Economic and Monetary Affairs Commissioner Olli Rehn told reporters in Brussels that he’s “confident” Greece will meet the conditions necessary for the second bailout to win approval when finance ministers meet.
“Euro-zone finance ministers will now probably offer Greece a second 130 billion-euro support package at their meeting on Wednesday,” said Christian Schulz, senior economist at Berenberg Bank in London. “Whether or not the vote will reduce Greek uncertainties for long is a very open question.”
Pending the terms for securing aid being met by Greece, attention will shift to national capitals as the second bailout goes through the parliamentary approval process. Merkel plans to ask German lawmakers to vote on the next bailout on Feb. 27. Other euro governments including the Netherlands and Finland have yet to schedule a date for parliamentary votes.
Together with steps taken in Spain, the Greek vote shows that “Europe is finding the strength to learn the lessons of the crisis and take the necessary decisions,” Seibert said.
Still, German Finance Minister Wolfgang Schaeuble told German lawmakers on Feb. 10 that Greece was set to miss deficit goals. Schaeuble told legislators that current plans would leave Greece’s debt as high as 136 percent of GDP by 2020, according to two people in the meeting. That compares with the 120 percent foreseen in the second bailout, down from about 160 percent last year. Schaeuble was briefing on estimates from the so-called troika of international creditor assessing Greece’s program.
Greece “will be saved in one way or another,” Schaeuble told newspaper Welt am Sonntag yesterday, though the country must “do its homework."