BRUSSELS-Europe's leaders prepared the way for a second, large, bailout of Greece yesterday, pledging not to abandon the debt-laden nation to a default providing it votes a tough package of austerity measures through its Parliament next week. "We have agreed that there will be a new program for Greece," Chancellor Angela Merkel of Germany told reporters at the end of a two-day summit meeting in Brussels. "This is an important decision that says once again we will do everything to stabilise the euro overall." The comments came a day after Greece agreed with international creditors to more austerity measures as part of revised plans for 2011-15 designed to plug a gap in its future financing.
If the Greek Parliament approves this proposal next week, the EU and the International Monetary Fund will release a £12 billion, or $17 billion, tranche of emergency aid, and then put together a second rescue. The shape and size of the new bailout could become clear on July 3 at a meeting of euro zone finance ministers in Brussels. All this comes a little more than a year after the government in Athens won a package of loans worth £110 billion. "Greece is supported," the French President, Nicolas Sarkozy, said at a news conference. "Europeans trust the Greek authorities and Parliament in their endeavors to implement the bold measures that have been decided." After discussions with the Greek prime minister, George Papandreou, European leaders expressed confidence that Greece's Parliament would approve the controversial austerity package, which has already prompted large protests in Athens.
Changes to the plan, negotiated with European and IMF officials Thursday, are certain to make it even less popular still on the streets of Greece. The new austerity programme will now include a one-off solidarity levy on personal income ranging between one and five per cent, according to income. Meanwhile, the tax-free threshold on income will be lowered to £8,000 annually from the current level of £12,000, with the lowest rate set at ten per cent-but with exemptions for people up to 30 years old, pensioners over 65 and the disabled. There will also be an annual levy of £300 on the self-employed.
On Thursday, at a meeting of centre-right parties in Brussels, the Greek opposition leader, Antonis Samaras, refused to bow to pressure to change course and support the new plan during next week's parliamentary vote.
During the discussion, Samaras was warned that Europe was engaged in a war for its economic stability, according to one official who requested anonymity due to the sensitivity of the discussion. Reflecting the disappointment of European leaders at Samaras's stance, Merkel said that "it would be better to have the widest support." She also insisted that any new programme for Greece should be monitored closely. "One needs to do a reality check on whether the assumptions are proved right," she said. (AP)