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Greek bailout: Tory Eurosceptics fears over UK contribution | Greek bailout: Tory Eurosceptics fears over UK contribution |
(about 5 hours later) | |
Conservative Eurosceptics say they fear the UK may have to contribute to a fund as part of the Greek bailout, despite a 2010 political agreement ruling it out. | Conservative Eurosceptics say they fear the UK may have to contribute to a fund as part of the Greek bailout, despite a 2010 political agreement ruling it out. |
A source close to Chancellor George Osborne has said the government is "immovable" on the issue and will not contribute to eurozone bailouts. | A source close to Chancellor George Osborne has said the government is "immovable" on the issue and will not contribute to eurozone bailouts. |
But Tory MP Steve Baker said Westminster may be unable to stop UK taxpayers' money being spent. | But Tory MP Steve Baker said Westminster may be unable to stop UK taxpayers' money being spent. |
The final decision may be made by EU states under a qualified majority. | The final decision may be made by EU states under a qualified majority. |
Using the EU-wide European Financial Stability Mechanism (EFSM) to pay for a transitional loan to Greece could be approved if 15 countries representing 65% of the EU's population vote in favour. | |
So the UK and the Czech Republic, which also objected, could be outvoted by the likes of France, which is in favour, says BBC political correspondent Chris Mason. | So the UK and the Czech Republic, which also objected, could be outvoted by the likes of France, which is in favour, says BBC political correspondent Chris Mason. |
Mr Baker, co-chair of the Conservatives for Britain group, said: "UK taxpayers' money could be spent, and there'll be nothing Westminster can do to stop it." | Mr Baker, co-chair of the Conservatives for Britain group, said: "UK taxpayers' money could be spent, and there'll be nothing Westminster can do to stop it." |
The EFSM is an emergency fund to support any of the 28 EU member states in financial difficulty. It is funded by borrowing against the EU budget, to which the UK contributes. | |
EU officials have said the commission has the legal right to use the fund for £12bn euros in loans which could be given to Greece in the coming weeks as part of the $86bn (£61bn; $95bn) rescue package agreed on Sunday. | |
The UK could potentially be liable for approximately 15% of any request under the EFSM - in the form of a guarantee rather than a cash transfer. | |
Whitehall sources are taking comfort that a number of other countries, such as Germany, Finland, the Czech Republic, Denmark and Sweden, have expressed reservations about using the EFSM for the bailout. | |
Prime Minister David Cameron said in 2010 he had won a "clear and unanimous agreement" that the EFSM would not be used for further eurozone bailouts, after it was used to assist Ireland and Portugal. | Prime Minister David Cameron said in 2010 he had won a "clear and unanimous agreement" that the EFSM would not be used for further eurozone bailouts, after it was used to assist Ireland and Portugal. |
He told reporters that the deal meant Britain would not "be dragged" into bailing out the eurozone in future. | |
Instead, responsibility was meant to fall on member states using the single currency. | Instead, responsibility was meant to fall on member states using the single currency. |
No 10 sources have said that agreement stands while those close to Mr Osborne said he was "immovable on the key principle that British taxpayers won't contribute to eurozone bailouts". | |
The BBC's Chris Mason added: "Downing Street points to the conclusions of a European Summit in late 2010 which spelt out that propping up countries in the eurozone was the responsibility of fellow users of the euro. | |
"But EU sources suggest this agreement can be overridden. | "But EU sources suggest this agreement can be overridden. |
"So what happens if the government's 'key principle' collides with democracy? 'We'll cross that bridge when we come to it,' a Whitehall source said." | "So what happens if the government's 'key principle' collides with democracy? 'We'll cross that bridge when we come to it,' a Whitehall source said." |
It comes as the International Monetary Fund criticised the terms of the bailout deal, saying it would take 30 years for Greece to repay all its debt to Europe and more of it would have to be written off. |