Tags: Eurogroup | Mistakes | Greek Bailout | Juncker

Former Eurogroup Chief Juncker Concedes Mistakes on Greek Bailout

Tuesday, 11 June 2013 08:23 AM

Former Eurogroup president Jean-Claude Juncker conceded Tuesday that mistakes were made in the bailout of Greece — days after a similar admission by the International Monetary Fund.

The Luxembourg prime minister, who played a central role in the 2010 bailout out through his position as the head of the grouping of the euro finance ministers, said the European Union and the IMF were "overly optimistic" in the early stages of the bailout process.

But Juncker, who stepped down as the Eurogroup president earlier this year, insisted the 240 billion euro ($317 billion) rescue program had met its basic aim of keeping Greece a member of Europe's single currency.

His remarks during a visit to Athens follow on from last week's admission from the IMF that the Greek rescue deal had failed to restructure the country's national debt early enough and overestimated the capacity of the Greek government to swiftly push through public sector and market reforms that had been neglected for decades.

A spat has since developed between the EU and the IMF, with the Washington-based institution also pressing Europeans to be more specific about any further debt relief that may be awarded Greece next year.

"It is true that the issues raised by the IMF are important ones," Juncker said. "There were mistakes. But who would not have made mistakes given the situation that Greece was in?"

Greece's conservative-led government has promised a return to growth and the international bond markets budget next year. Though the harsh austerity measures of spending cuts and tax rises have helped reduce the country's budget deficit, they have taken a big toll on the Greek economy — Greece is in its sixth year of a deep recession and unemployment has pushed unemployment up to 27 percent, with nearly two-thirds of under-25s out of work.

Left-wing opposition leader Alexis Tsipras renewed demands for the government to scrap austerity measures, describing the EU-IMF program in Greece as a blueprint for further advancing privatization and slashing labor rights across Europe.

"It's an effort to weaken the welfare state ... These neo-liberal reforms are being added to a state foundation built on patronage, making it even harder to serve the public's needs," Tsipras said late Monday in the southern city of Nafplio.

EU and IMF inspectors are currently in Greece to press for faster implementation of programs to fire civil servants and privatize state companies.

Meanwhile, shares on the Athens Stock Exchange suffered a second day of heavy losses — they were down 5 percent in afternoon trading — after a privatization deal for Greece's state-controlled natural gas company DEPA collapsed with Russian energy giant Gazprom pulling out unexpectedly.

Also Tuesday, Greece raised €1.625 billion ($2.15 billion) at an auction of 26-week treasury bills. The yield, or interest rate, on the offering was 4.2 percent, unchanged from a month ago.

Juncker, who met with Greek Prime Minister Antonis Samaras, was awarded Greece's highest honor.

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Former Eurogroup president Jean-Claude Juncker says mistakes were made in the bailout of Greece.
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Tuesday, 11 June 2013 08:23 AM
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