Fears of Greek Debt Default Overshadow European Union Gathering

BRUSSELS - A day before nearly $2 billion in debt becomes due for repayment by Greece’s nearly bankrupt government, European leaders gathered in Brussels on Thursday for a long-planned summit meeting now overshadowed by the mounting risk of a Greek default and revived fears about the future of Europe’s common currency.

In keeping with the European Union’s preference for orderly procedure rather than confronting crises as they happen, however, Greece’s desperate financial situation did not figure on the official agenda for the two-day gathering. Instead, leaders focused on long-stalled but recently revived plans to reduce dependency on Russian gas; the conflict in Ukraine; and the spreading chaos in Libya.

All the same, Greece’s travails and the threat these pose to Europe’s common currency, quickly muscled their way onto center stage, with leaders on both the left and right voicing concern about the failure of an agreement reached on Feb. 20 between Greece and its creditors to calm, never mind end, the long-running Greek crisis.

France’s Socialist president, François Hollande, siding with Germany and other countries that insist Greece must honor the pledges made in February, said Thursday’s summit meeting would emphasize “to one and all the respect of commitments.”

“There was an agreement that was reached on Feb. 20 and then confirmed on Feb. 24 and we are therefore going to put this agreement into effect,” he added.

Mr. Hollande and Chancellor Angela Merkel of Germany were due to meet the Greek prime minister, Alexis Tsipras, late Thursday on the sidelines here to discuss ways to contain a crisis that has again stirred speculation of a possible “Grexit,” or Greek exit, from the 19-nation eurozone.

In a sign of tensions, Charles Michel, the prime minister of Belgium, another country that uses the euro, complained that mediation with Greece should involve all members of the eurozone and could not be done by a few individual members.

“I am angry,” Mr. Michel said, according to Belgian news reports. “We did not give a mandate to either France or Germany to negotiate.”

A departure from the eurozone could force Greece to leave the European Union, too, a step that would, for the first time, throw into reverse a process of integration that has advanced steadily for more than six decades.

It would also raise doubts about the future integrity and viability of Europe’s most significant joint venture, its common currency.

“The eurozone is more than a fixed-rate system, it’s more than that,” Pierre Moscovici, the European commissioner for economic and financial affairs, said at a news conference in Brussels on Wednesday. “It’s a single currency and the single currency has to be perpetual for all its members and as soon as one leaves, the question is, who’s next?”

Greece’s uncoupling from the rest of Europe would also heighten geostrategic concerns, particularly in Washington, by raising the prospect of Greece turning to Russia, a country with which it has close historical ties, or even to China for aid.

Finland, a eurozone member long hostile to cutting Greece any slack, warned that trust in the euro hinged on carrying through on the deal reached last month by the Eurogroup, consisting of eurozone finance ministers.

“At the end of the day the euro is about confidence and we have to be confident we implement the decisions that we take,” the Finnish Prime Minister, Alexander Stubb, told reporters in Brussels.

One senior European diplomat, describing Greece as “the elephant in the room” at the meeting, lamented that “remarkably little progress has been made” in talks between Greece and creditors and that the stalemate meant “we are very near a crunch.”

The February deal extended Greece’s current bailout for four months but made the release of any pending payments to Athens contingent on its adoption of measures to boost tax revenue, contain government spending and implement labor market and other changes. Greece has had two international bailouts worth 240 billion euros, or $273 billion, since 2010.

Instead, the Greek Parliament, dominated by the radical left-wing Syriza party, passed a “humanitarian crisis bill” on Wednesday that the European Commission, one of Greece’s principal creditors, objected to as a signal that Athens was “proceeding unilaterally and in a piecemeal manner that is inconsistent with the commitments” made in February.

Mr. Tsipras, the Greek prime minister, has faced criticism from some supporters for accepting a deal that effectively continued an austerity program his party had vowed to scrap. He seized on the European Commission’s objections to the anti-poverty bill to try and rally outrage against Brussels, presenting Greece’s creditors as hardhearted Scrooges who want to veto help for the poor by bureaucratic fiat.

In what has become as much a public relations battle as a debate over budget targets, Mr. Moscovici, the bloc’s senior economic policy maker, denied this, saying there was “no question of us putting any kind of veto on a humanitarian bill.” Brussels, he said, merely wants to be consulted, as Athens had promised to do.

While many Greeks seem to support their government, many European leaders and officials are exasperated by what they see as a push by Athens to ignore its February pledge and a campaign to whip up public anger against the institutions and countries, particularly Germany, whose cash Greece desperately needs to avert default.

“The anti-German and anti-European rhetoric by Greek ministers have cost the Greek government a lot of credibility,” Guy Verhofstadt, head of a centrist bloc of legislators in the European Parliament said.

Instead of denouncing Germans and other creditors, Mr. Verhofstadt added, “first Tsipras should show that he is willing to reform Greek society. It is very disappointing we are already waiting for months for a serious reform plan.”

(Πηγή: www.nytimes.com)