Troika delays report on Greece

Decision on next bail-out instalment postponed.

Draghi seeks to calm fears over ECB plans

Finns, Dutch and Germans question ESM’s bank role

Delays in completing a report on Greece’s finances mean that the eurozone’s 17 finance ministers are to postpone discussions about granting the next instalment of the country’s bail-out.

The report by the ‘troika’ representing Greece’s international lenders – the European Commission, European Central Bank and International Monetary Fund – was expected to be finished by the end of September, giving finance ministers time to study it, debate it at their meeting in Luxembourg on 8 October, then reach a decision on the €31.5 billion tranche by the end of October.

However, the troika announced on Friday (21 September) that it was taking a “brief pause from its discussions with the [Greek] authorities” and would not return to Athens for at least a week.

The delay is due in part to the complex and sometimes strained negotiation between the troika and the government over the extent to which Greece is missing its fiscal targets and what it plans to do to meet them. But there is a political dimension too. One senior EU official said this week that there was pressure on the troika to postpone publication of its conclusions until after the US presidential election on 6 November, for fear that a negative finding could send shockwaves throughout the world economy.

A spokesman for Olli Rehn, the European commissioner for economic and monetary affairs and the euro, said last week that he could not say when exactly the troika report would be completed but that it should be at some point in October.

Greece’s government is racing to agree an additional package of cuts worth €12 billion before the eurozone’s finance ministers meet. The leaders of the three parties in the governing coalition have to agree the measures before they are put to a vote in the country’s parliament.

Greece also wants to be given more time by the eurozone to meet its reform targets, and signs emerged this week that it would succeed when Jean-Marc Ayrault, France’s prime minister, said that he was prepared to offer Greece more time “on condition that Greece is sincere in its commitment to reform, especially fiscal reform”.

Spain under pressure

The next few days are important for Spain, too, as the government continues to resist pressure from financial markets and a group of eurozone countries, led by France, which want the Spanish government to ask for external assistance. Spain’s reluctance is supported by Germany, which does not want Spain to request help – such as through the European Central Bank’s bond-buying programme.

Banking supervision

MEPs held their first debate yesterday (26 September) on European Commission proposals to establish the European Central Bank as the eurozone’s banking supervisor.

Members of the European Parliament’s economic and monetary affairs committee stressed the need for accountability under the new system, with some calling for the Parliament to be allowed to conduct investigations into the supervisor’s work, set its budget and appoint its head.

Many MEPs said they were concerned that setting up a single supervisor would create divisions between the eurozone and the rest of the European Union.

“Instead of a single supervisory mechanism, we have a division of Europe; a very explosive division,” Werner Langen, a German centre-right MEP, said during the debate.

The Parliament does not have any direct power to amend the draft supervisor legislation but it can exert influence, because it has a voice in discussions of the Commission’s parallel proposals to change the voting arrangements of the European Banking Authority.

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