Europe Wants Assurances For Latest Greek Bailout The European Union says Greece has made some progress, but not enough, to merit the new bailout it desperately needs to avoid default and keep the euro as its currency. Now, talk is growing about contingency planning if Greece fails to meet the bailout conditions and defaults.
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Europe Wants Assurances For Latest Greek Bailout

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Europe Wants Assurances For Latest Greek Bailout

Europe Wants Assurances For Latest Greek Bailout

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From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.


And I'm Robert Siegel. The European Union says Greece has made some progress but not enough to merit the new bailout it desperately needs. The money will allow Greece to avoid default. Greeks are increasingly bitter about the austerity measures the EU is imposing on them, and Greece's EU partners are losing trust that the Greeks will implement those measures. NPR's Eric Westervelt has the story from Brussels.

ERIC WESTERVELT, BYLINE: Today, the European Union finally received assurances from Greek opposition leader Antonis Samaras that he would stick with the painful reform plan even after elections in April. Samaras had suggested he'd try to renegotiate the austerity measures if he becomes prime minister. His signature on the plan was one key demand eurozone leaders made for giving Greece 130 billion euro in rescue money on top of the billions it got in the first bailout. But other important demands are not yet resolved.

JAN KEES DE JAGER: It's fair to say that my patience has run up.

WESTERVELT: Dutch Finance Minister Jan Kees de Jager tells NPR he wants more from Greece on top of legislation Athens passed on Sunday.

JAGER: We have to see the evidence of implementing the measures into law, and just promises are not enough, not anymore. We do want to see more guarantees in place, in law, some of the measures to implement in the next two weeks before we can give a final yes to the package.

WESTERVELT: The Netherlands and Germany - the richer, triple A-rated eurozone countries - seem close to the breakup point with Greece. Finance Minister de Jager says, during this two-year crisis, the Greek government has, so far, failed to sell enough state assets, failed to collect enough taxes, failed to meet budget targets and balked at promised spending cuts. Now, de Jager says they want to know if the numbers add up given Greece's shrinking economy.

JAGER: If we do not see a full credible package with a debt sustainability analysis, then we and certainly not I can make any final decision on Greece.

WESTERVELT: De Jager and his fellow euro group finance ministers cancelled face-to-face talks today in favor of a conference call because Greece failed to clarify how it plans to close a huge budget gap this year. Finance ministers are scheduled to meet here in Brussels next Monday, which has become Greece's latest de facto deadline. In a related development, there's growing concern that not enough private sector Greek bond holders will sign off on a debt swap that could see them lose up to 70 percent of their investment.

About a quarter of the 130 billion euro bailout is reportedly made up of incentives or sweeteners to be paid to private sector investors to encourage them to take part. De Jager says the goal is still to do everything possible to keep Greece in the currency union. But there is more serious talk now about a Greek exit from the eurozone.

CHARLES PROCTOR: Whatever is said for public consumption, I think in-private preparations will have been made.

WESTERVELT: That's finance attorney Charles Proctor, who has advised clients on what might happen if a country abandoned the euro. Proctor says companies and countries are quietly preparing for the worst.

PROCTOR: The bank regulator in the U.K., the Financial Services Authority, has told banks that it ought to look at the collapse of the euro as part of their contingency planning to ensure that they're able to absorb the risks which exist in their book.

WESTERVELT: No one wants a messy default with a run on Greek banks, more street violence and economic hardship for Greeks. No one wants deep losses for European and some American banks either. Proctor notes there is no mechanism for a country to leave the eurozone.

PROCTOR: We would be going into a legal black hole. They will have to close down the country. They will have to impose capital controls. They will have to prevent financial transfers. So it would be very radical, and it would have to be achieved very quickly.

WESTERVELT: Although the risk of chaos is huge, senior EU officials, including Dutch Minister de Jager, are trying to reassure the public and investors that the EU is now strong enough to handle a messy Greek default if it comes to that. Eric Westervelt, NPR News, Brussels.

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