Greece-Deal: The blueprint for the bridge – Neue Zürcher Zeitung

The European Commission has put forward a concrete proposal for the much-needed bridge financing for Greece. EU countries outside the euro zone are to be protected against losses.

The EU Commission on Wednesday presented a concrete proposal to deny much needed bridge financing for Greece from the European Financial Stabilisation Mechanism (EFSM). Given the apparent lack of better solutions this is the best remaining option, said the Vice-President of the European Commission, Valdis Dombrovskis, before the media. Among the various options examined were the EFSM Terms and bilateral loans from other Member States, the two most realistic options, but there were no prospect of any bilateral aid, Dombrovskis said.

Protection for non-euro countries

With the proposal the Commission specifies a ventilated on Tuesday idea. It proposes the grant of the EFSM loan to Athens up to € 7 billion, with a maturity of up to three months. It is intended to bridge the time until the projected utility of the euro crisis fund ESM is negotiated and approved. Thereafter, the loan would be repaid with money from the ESM program. In this way Athens could meet the most urgent obligations, in particular those due on Monday repayment of government bonds held by the euro system (European Central Bank and national central banks) are located, and the payment of arrears to the IMF. The removal of these residues is a condition for the participation of the IMF in the new program, Dombrovskis said. Since Greece until mid-August has further payment obligations of € 5 billion, a further bridge financing is needed, the ESM program until then should not be available.

The use of the EFSM to all 28 EU member states by a qualified majority agree because the EFSM is around the EU instrument from the beginning of the debt crisis. The money will be procured on the market, as a guarantee shall be financed by all member states EU budget. Especially Great Britain but a possible exposure of British taxpayers rejected on Tuesday. Dombrovskis said that it was aware of the concerns conscious and working on collateral or guarantees in order to preserve the non-euro countries before the financial consequences, should Athens fail to repay the EFSM loan. Among the possible options for this belongs the use of future flows from the EU budget or gains from the SMP / ANFA-bond purchase programs of the euro system.

The “investment program”

In a separate step, the Commission has promised “investment package” of over 35 billion € for Greece concretized. It is but “only” money from the EU budget, particularly from the cohesion and agricultural policy which is due to land in the financial period 2014 to 2020 and in any case of which € 4.5 billion has been disbursed. But Brussels proposes preferential conditions for the use of some funds and for the last remnants of the period from 2007 to 2013, in order to facilitate the access of Athens.