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Euro Area/Greek debt crisis

Publié le May 12, 2011
Interview given by Christine Lagarde, Minister for the Economy, Finance and Industry, to the daily newspaper “Le Figaro”
Paris, May 11, 2011

Q. – The Euro Area is still worrying the markets. Last Friday the German press revealed a secret meeting held by certain Euro Area member States to discuss the difficulties of financing Greece. What happened at that meeting?

THE MINISTER – It’s true that it ought to have remained confidential. We were all surprised to see the working notes of our German counterpart, Wolfgang Schäuble, find their way onto the website of “Der Spiegel”… The fact remains that it was an ordinary working meeting, planned a long time in advance by the Euro Area countries that are G20 members. It wasn’t of an urgent nature. The dinner was planned in order to take stock before the 16 June Council, which will focus on the situation of public finances in the Euro Area, and more particularly Greece. Hence the presence at the table on Friday evening of our Greek opposite number, of whom, after all, we had important questions to ask…

Q. – What did you talk about? A new rescue plan?

THE MINISTER – We talked about the implementation of the Greek plan adopted a year ago. A mission from the IMF, the Commission and the ECB is currently in Athens. We can’t conclude before they return.

Despite the government’s efforts and the major reforms passed, certain targets – particularly in the budgetary field – haven’t been achieved. In these conditions, it’s hard to envisage a return to the market in 2012, as initially expected. Greece must also tell us the timetable for the particularly important €50 billion privatization the government has promised. We understand that the State is facing problems with an inventory of assets and the definition of title deeds, but it must know we’re very keen to ensure it keeps all its promises…

Q. – Is Greece going to have to restructure her debt?

THE MINISTER – We’re ruling it out in any form. There’s no question, either, of Greece leaving the Euro Area! I want to reassure investors.

Q. – European taxpayers are already under pressure. Isn’t it time to make private investors pay too, as the Germans are insisting?

THE MINISTER – All our efforts in the past year – with the creation of the European Financial Stability Facility (EFSF) and then the establishment in 2013 of a permanent stability mechanism – have been aimed at ensuring no Euro Area country can default on its debt. Nobody wants to continue financing countries in difficulty! But we must absolutely do it, because the restructuring of one State’s debt would send such a negative message to investors that the whole area would suffer from it, and the cost of refinancing the debt of all the countries would climb. Besides, in the hypothetical event of a restructuring, the Greek bonds held by the ECB would be heavily devalued.

Q. – In practice, what form could extra aid take, and how much would it amount to? There was talk in Athens on Tuesday of €60 billion as early as June…

THE MINISTER – No decision has been taken, and the Greek government’s priority must be to mobilize its own resources, particularly by implementing its privatization programme swiftly. We have tools to tackle all situations, in the shape of the EFSF and ESM [European Stability Mechanism]. We’ll discuss all this on 16 May./.

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