BRUSSELS - Greece needs at least two more years and an additional 30 billion euros in order to be able to meet the targets set for it by the euro zone countries, European sources tell Süddeutsche Zeitung.
When – and indeed if – the country gets money from the second bailout package is unclear. In the words of one high-level EU diplomat: “We now have a fundamental problem.”
High-level diplomats confirmed on Monday in Brussels that Greece would remain for longer than initially planned on the euro zone financial drip. The country will presumably not be able to pay its way from 2015, as planned, without additional financial help.
Greece will also not be able to meet its target of being able to refinance its debt entirely on financial markets from 2020. According to both Brussels and European national banks, Athens needs "at least two years" more to get back on its feet, and they both put the new financial hole at "some 30 billion euros."
Meanwhile, the matter of whether (and if so when) the country, which is on the brink of bankruptcy, gets a further tranche from the second bailout fund remains open. That would put up to 130 billion euros of euro zone and International Monetary Fund (IMF) money at Greece’s disposal, but it is only supposed to be paid when Greece meets its targets, so that it can stand on its own two feet from 2020 onwards.
Should that not be the case, IMF statutes call for payments to be discontinued. However, were the IMF to step back, there would no longer be any basis for some single-currency-zone countries, Germany among them, to continue paying.
To try and find a way out, at a recent meeting of euro zone finance ministers in Cyprus, IMF boss Christine Lagarde proposed giving Greece more time to put into effect the requisite reforms, and that the euro countries take over the additional costs. This was refused by several countries including Germany.
European central bankers say that the underlying cause of the present situation is that crisis-shaken Greece has gone into the second aid package with a hole of more than 10 billion euros, and Athens is failing to implement numerous measures as planned -- for example, reformation of the tax system and the sale of state property.
And now Prime Minister Antonis Samaras is asking for two additional years to fulfill austerity requirements. Because of the catastrophic state of the Greek economy, which has been shrinking for five years, Samaras says it is not in the realm of possibility to cut government spending so quickly. He fears that, if he does, unemployment will rise even more.
According to central bankers, Greece’s standing as a euro zone country continues to be very iffy. While other member countries wanted to keep Athens in, public skepticism is making governments reluctant to come up with the extra money. And yet as one national bank source put it: "If Greece is to stay in the zone, the governments are going to have to come up with 30 billion euros."
The big worry now is that the governments want to push responsibility onto the European Central Bank (ECB) that made emergency funding of 3.5 billion euros available to Greece this past August and holds some 40 billion euro in Greek government bonds.