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Greek bailout: Tory Eurosceptics fears over UK contribution Greek bailout: Tory Eurosceptics fears over UK contribution
(35 minutes 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. John Redwood said it would be an "absolute outrage" if the UK had to guarantees loans to Greece through the European Financial Stability Mechanism.
Tory MP Steve Baker said the UK may be unable to stop this from happening. A source close to Chancellor George Osborne has said the government will not contribute to eurozone bailouts.
EU officials said they wanted to allay concerns and come up with a "mutually acceptable" solution to all EU members. EU officials said it was seeking a "mutually acceptable" solution.
"We are working to find mutually acceptable solutions that can be agreed with the UK and other euro-outs to allay their concerns," he told the BBC. "We want to do this consensually." "We are working to find mutually acceptable solutions that can be agreed with the UK and other euro-outs to allay their concerns," a spokesman told the BBC. "We want to do this consensually."
Conservative MPs have warned that the UK may not have a veto on the issue and the final decision may be made by EU states under the system of qualified majority voting. Conservative MPs have warned the final decision may be made by EU states under the system of qualified majority voting and the UK could be outvoted.
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. The EU-wide European Financial Stability Mechanism (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.
So the UK and the Czech Republic, which has also objected, could be outvoted by the likes of France, which is in favour, says BBC political correspondent Chris Mason. EU officials have said the commission has the legal right to use the fund for £12bn euros in short-term loans which could be given to Greece in the coming weeks as part of the $86bn (£61bn; $95bn) rescue package agreed on Sunday.
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." 'Slap in the face'
'Clear agreement' Using the fund could be approved if 15 countries representing 65% of the EU's population vote in favour, even if the UK and other EU members who oppose the move, such as the Czech Republic, object.
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.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. Mr Redwood said the UK should refuse to sign up to any guarantees, as to do so would be a "clear violation" of an agreement reached by David Cameron in 2010 to exclude the UK from future eurozone bailouts.
He described it as "a deliberate slap in the face for the UK" by the Commission.
And Steven 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."
Principle
British officials in Brussels said it was an "immovable principle" that the UK would not contribute to eurozone bailouts.
However, they recognised that Greece needed emergency financial support and the UK did not object to the use of the European Financial Stability Mechanism as long as UK was ringfenced from any liabilities.
EU officials have suggested a number of "collateralisation" options are being considered which might ensure this.
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. He told reporters after an EU summit 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". It comes as the International Monetary Fund criticised the terms of Greece's latest 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.
The BBC's Chris Mason said that when pressed on what the UK would do if this agreement was overridden, a Whitehall source said "we'll cross that bridge when we come to it".
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.