Rehn: Eurozone countries must decide on Greece aid this week

Economic Commissioner welcomes IMF money, as long as EU stays in control

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The European Commissioner for Economic and Monetary Affairs, Olli Rehn, urges the countries in the euro zone to make a decision on assistance to beleaguered Greece at the two-day EU summit which begins on Thursday.
      “We already have the technical capability. Now we need a political decision. This is also important for Greece, so it will know what to expect”, Rehn said on Tuesday in Brussels in a joint interview with Helsingin Sanomat, the Danish newspaper Politiken, and the Swedish daily Svenska Dagbladet.
     
Rehn says that there are several options on the table.
      One possibility is that the euro countries will agree to help Greece with bilateral loans, but only if necessary. The loan arrangements would be administered by the European Commission.
      “Once a political decision is made on the mechanism, it could be implemented rapidly, if there is a need”, Rehn said.
     
The number of countries taking part in the aid, and the amount of aid remain open. The aim is to send a stronger signal to the markets that Greece will not be allowed to fail.
      The biggest question mark is what Germany wants.
      Chancellor Angela Merkel has been reluctant to invest the money of German taxpayers into Greece, a country that has a reputation of reckless economic practices.
      Merkel has said that there should not be any great expectations for major decisions on Greece at the summit. Germany is also resistant to guaranteeing Greece’s loans.
     
“I understand Germany’s concerns”, Rehn said on Tuesday.
      Germany might be persuaded to support an EU aid plan if the International Monetary Fund were to join the effort to lend Greece money.
      Last week Finland also called for input from the IMF.
      Rehn sees no problems with possible IMF loans, as long as the leadership in the Greek aid package remains with the EU, and as long as the rules of the EU are followed in the process.
     
The EU is the largest source of IMF funding, accounting for nearly a third of its capital.
      It was said previously that having the IMF come in would be an excessive blow to the prestige of the euro zone. Commissioner Rehn feels that there is no point in launching into such “theological debates” over the IMF and the euro zone.
     
It was reported on Tuesday that France and Spain were planning a separate meeting of the euro countries for Thursday.
      The meeting aims at squeezing out a statement on Greece by the leaders of the 16 euro countries, before the full meeting of the European Council, comprising the leaders of all 27 member states. However, on Tuesday, Prime Minister Matti Vanhanen (Centre) had not yet received an invitation for a separate euro zone summit.
     
Rehn says that there is a need for rapid decisions.
      “We are at a crossroads. Greece can cause serious damage [to the euro]. Or then we can learn from the crisis.
      Rehn adds that the Greek crisis is not a problem for the euro zone alone. He says that European solidarity obliges everyone, and the threat to stability threatens every member state. Therefore, he feels that the possible helpers of Greece must not be an “enclosed group”.
      However, it is not likely that there will be many enthusiastic money lenders outside the euro zone. For instance, Sweden feels that supporting Greece is a matter for the euro zone and the IMF.


Previously in HS International Edition:
  Some Euro countries willing to let Greece take IMF money (17.3.2010)
  EU urges Greece to enact more spending cuts (16.2.2010)

See also:
  Commissioner Olli Rehn places his faith in fellow Finns (8.2.2010)

Helsingin Sanomat