Euro zone approves 12bn euros bailout for Greece

Reuters – Euro zone finance ministers have approved a 12 billion euro installment of Greece’s bailout, but signaled that the nation must expect significant losses of sovereignty and jobs.

Ministers in the Euro-group gave the go-ahead for the fifth tranche of Greece’s 110-billion-euro financial rescue agreed last year, and said details of a second aid package for Athens would be finalized by mid-September.

But within hours of Saturday’s decision, Eurogroup chairman, Jean-Claude Juncker, warned Greeks that help from the EU and Inter-national Monetary Fund (IMF) would have unpleasant consequences.

“The sovereignty of Greece will be massively limited,” he told Germany’s Focus magazine on Sunday.

“One cannot be allowed to insult the Greeks. But one has to help them. They have said they are ready to accept expertise from the euro zone,” Juncker said.

Greeks are acutely sensitive to any infringement of their sovereignty and any suggestion that foreign “commissars” might become involved in running the country is an incendiary political issue and could trigger more street protests.

After Saturday’s conference call on Saturday, the 17 euro zone ministers agreed the fifth tranche would be paid by July 15, as long as the IMF’s board signed off on the disbursement. The IMF is expected to meet on July 8 to approve it.

The payment will allow Greece to avoid the immediate threat of debt default, but the country still needs the second rescue package, which is also expected to total around 110 billion.

Between now and then, finance ministers will work on the “precise modalities and scale” of private creditors’ involvement.

Germany hopes this will eventually total around 30 billion euros, with banks voluntarily buying new Greek bonds when old ones they hold mature, meaning Athens would not have to produce cash to repay its creditors immediately.