THE EURO group's pledge to provide a last-resort rescue net for Greece was specifically crafted in a way that enables euro countries to stand back from the special loan scheme if they wish, The Irish Timeshas learned.
The statement issued by euro group leaders at an EU summit a week ago conveys the impression that all single currency members would participate in any rescue.
However a high-level source in Brussels, with knowledge of how the statement was written, said the language was purposely nuanced to give countries the option of not taking part without breaching the letter of the pledge.
The statement from euro group leaders said: “As part of a package involving substantial International Monetary Fund financing and a majority of European financing, euro area member states are ready to contribute to co-ordinated bilateral loans.”
According to the source, the fact that this part of the statement did not make reference to “the euro area member states” – specifically the absence of the word “the” – reflected the need to give countries the choice of standing aside from any rescue if they could not or did not wish to take part.
The expectation at the talks table was that each of Greece’s 15 fellow members of the EU currency would extend it bilateral loans if the financing it raised from the markets fell short of its requirements.
However several other euro countries are under distress – Ireland among them as well as Spain and Portugal – and parliamentary approval would be required in the Netherlands. As a result, the language in the statement gives leeway to trigger the voluntary mechanism without loans from all other euro members.
Taoiseach Brian Cowen has pledged that Ireland would provide loans to Greece – if the costs of each participating country were met – in the interests of financial stability in the euro zone.
Pointing to Mr Cowen’s own remarks after the summit, an Irish source said there was no change in the Government’s position when asked about the specific phrasing of the euro statement.
“The working assumption in the Irish system is that we would participate if the mechanism was needed,” the Irish source said.
Without saying “the euro area member states”, the statement from euro group leaders said “euro area member states reaffirm their willingness to take determined and co-ordinated action” to help Greece, if needed.
However, it added that any disbursement on the bilateral loans would be decided by “the euro area member states by unanimity subject to strong conditionality and based on an assessment by the European Commission and the European Central Bank”.
It also said “all euro area members” must conduct sound national policies in line with the agreed rules and should be aware of their shared responsibility for financial stability in the area.
