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| European Finance Officials Agree ‘in Principle’ on New Greek Bailout | European Finance Officials Agree ‘in Principle’ on New Greek Bailout |
| (about 1 hour later) | |
| BRUSSELS — European finance officials pledged support and money for Greece on Thursday, even as the prospects of reaching a final bailout deal were clouded by political uncertainty in Athens and German doubts about the need to preserve Greek membership in the eurozone. | |
| Finance ministers of the 19 countries that use the euro currency agreed to “grant in principle” a new bailout package for Greece that could total 86 billion euros, or about $94.5 billion. | Finance ministers of the 19 countries that use the euro currency agreed to “grant in principle” a new bailout package for Greece that could total 86 billion euros, or about $94.5 billion. |
| And those ministers were joined by finance officials from the rest of the 28-nation European Union in agreeing to give Greece short-term loans of as much as €7 billion to meet its immediate needs. | And those ministers were joined by finance officials from the rest of the 28-nation European Union in agreeing to give Greece short-term loans of as much as €7 billion to meet its immediate needs. |
| The European Central Bank, in Frankfurt, offered its support by expanding an emergency line of credit for Greece’s banks by €900 million, raising the running total to nearly €90 billion. | The European Central Bank, in Frankfurt, offered its support by expanding an emergency line of credit for Greece’s banks by €900 million, raising the running total to nearly €90 billion. |
| The central bank’s move prompted Deputy Finance Minister Dimitris Mardas of Greece to tell state television later Thursday that the country’s banks would reopen on Monday. A decision on what to do about the limits on A.T.M. withdrawals and restrictions on international money transfers will be made on Friday, a ministry official said. | The central bank’s move prompted Deputy Finance Minister Dimitris Mardas of Greece to tell state television later Thursday that the country’s banks would reopen on Monday. A decision on what to do about the limits on A.T.M. withdrawals and restrictions on international money transfers will be made on Friday, a ministry official said. |
| Those decisions on Thursday came hours after the Greek Parliament acceded to demands from its creditors — and turned its back on the ruling Syriza party’s pledges to end austerity — by passing the first in a series of measures intended to improve the performance of the economy and impose budget discipline on the government. | Those decisions on Thursday came hours after the Greek Parliament acceded to demands from its creditors — and turned its back on the ruling Syriza party’s pledges to end austerity — by passing the first in a series of measures intended to improve the performance of the economy and impose budget discipline on the government. |
| But all of the positive signals from European finance officials had a tentative tone, in keeping with the tenuous nature of a proposed bailout program that even the Greek prime minister, Alexis Tsipras, has said he opposes but that he considers a lesser evil than being forced out of the eurozone. | But all of the positive signals from European finance officials had a tentative tone, in keeping with the tenuous nature of a proposed bailout program that even the Greek prime minister, Alexis Tsipras, has said he opposes but that he considers a lesser evil than being forced out of the eurozone. |
| The European Central Bank, for example, extended the emergency line of credit for only one week. The eurozone finance ministers said they were supporting the bailout only on the condition that Athens “swiftly” adopt more measures to overhaul its economy. And the €7 billion in short-term loans must still be confirmed in writing by Friday afternoon. | The European Central Bank, for example, extended the emergency line of credit for only one week. The eurozone finance ministers said they were supporting the bailout only on the condition that Athens “swiftly” adopt more measures to overhaul its economy. And the €7 billion in short-term loans must still be confirmed in writing by Friday afternoon. |
| If that money is dispensed, it might enable Athens, among other steps, to repay about €2 billion in arrears to the International Monetary Fund, as well as €4.25 billion owed to the European Central Bank on Monday. | If that money is dispensed, it might enable Athens, among other steps, to repay about €2 billion in arrears to the International Monetary Fund, as well as €4.25 billion owed to the European Central Bank on Monday. |
| The central bank’s president, Mario Draghi, said at a news conference on Thursday that he was confident Greece would be able to make those payments. “I want to thank all of the members of the E.U. that have made that possible,” he said. | The central bank’s president, Mario Draghi, said at a news conference on Thursday that he was confident Greece would be able to make those payments. “I want to thank all of the members of the E.U. that have made that possible,” he said. |
| Payment of those near-term debts by Greece would remove a major source of uncertainty that has weighed on financial markets and the Greek economy. Greece’s failure to pay money it owed to the I.M.F. last month was a warning that the government was almost out of money, and it contributed to a chain of events that led Greek banks to close, suffocating the economy. | Payment of those near-term debts by Greece would remove a major source of uncertainty that has weighed on financial markets and the Greek economy. Greece’s failure to pay money it owed to the I.M.F. last month was a warning that the government was almost out of money, and it contributed to a chain of events that led Greek banks to close, suffocating the economy. |
| But whether Greece can agree to a new bailout program is still far from certain. Germany’s finance minister, Wolfgang Schäuble, suggested on Thursday that Greece might be better off leaving the eurozone. | But whether Greece can agree to a new bailout program is still far from certain. Germany’s finance minister, Wolfgang Schäuble, suggested on Thursday that Greece might be better off leaving the eurozone. |
| Mr. Draghi declined to comment directly on Mr. Schäuble’s comments, which caused a furor in Europe. “Our mandate is to act based on the assumption Greece will be a member of the euro area,” Mr. Draghi said. | Mr. Draghi declined to comment directly on Mr. Schäuble’s comments, which caused a furor in Europe. “Our mandate is to act based on the assumption Greece will be a member of the euro area,” Mr. Draghi said. |
| Still, even some members of the European Central Bank’s policy board, the Governing Council, are known to be skeptical about the prudence of continuing to provide loans to Greece’s teetering banks. | Still, even some members of the European Central Bank’s policy board, the Governing Council, are known to be skeptical about the prudence of continuing to provide loans to Greece’s teetering banks. |
| Asked at the news conference whether the Governing Council decision to increase the emergency loans had been unanimous, Mr. Draghi avoided a direct answer. He said that agreeing to increase the loans, under the central bank’s rules, required only a two-thirds majority. During earlier debates, some members of the Governing Council were in favor of withdrawing all emergency lending from Greek banks, which would have caused them to fail and the economy to collapse. | Asked at the news conference whether the Governing Council decision to increase the emergency loans had been unanimous, Mr. Draghi avoided a direct answer. He said that agreeing to increase the loans, under the central bank’s rules, required only a two-thirds majority. During earlier debates, some members of the Governing Council were in favor of withdrawing all emergency lending from Greek banks, which would have caused them to fail and the economy to collapse. |
| Mr. Draghi on Thursday also raised the possibility that the European Central Bank could begin buying Greek bonds as part of a stimulus program intended to pump money into the eurozone economy. Such a step would take further pressure off the Greek economy, for example by making it possible for Greek banks to sell their holdings of Greek government debt. | Mr. Draghi on Thursday also raised the possibility that the European Central Bank could begin buying Greek bonds as part of a stimulus program intended to pump money into the eurozone economy. Such a step would take further pressure off the Greek economy, for example by making it possible for Greek banks to sell their holdings of Greek government debt. |
| Greek bonds are currently ineligible for the central bank’s stimulus buying because they are not considered “investment grade” by debt ratings agencies. But the central bank’s Governing Council could make an exception for Greek debt, as it has for Cypriot debt, if it was convinced that the country was following a credible recovery program. | |
| But while bureaucratic wheels in Brussels and Frankfurt turned smoothly, public anger reached a boil in Greece over terms imposed by creditors. There were protests in Athens and other Greek cities on Wednesday, as well as violent late-night clashes between the police and small groups of radical activists, many of them foreigners. | But while bureaucratic wheels in Brussels and Frankfurt turned smoothly, public anger reached a boil in Greece over terms imposed by creditors. There were protests in Athens and other Greek cities on Wednesday, as well as violent late-night clashes between the police and small groups of radical activists, many of them foreigners. |
| In the European Parliament, meeting in Brussels on Thursday, supporters of Syriza denounced the bailout terms as the product of bullying by Germany and a betrayal of European solidarity. They blamed Germany and its allies for what they described as punitive conditions akin to those of the Treaty of Versailles, which imposed harsh terms on Germany at the end of World War I. | In the European Parliament, meeting in Brussels on Thursday, supporters of Syriza denounced the bailout terms as the product of bullying by Germany and a betrayal of European solidarity. They blamed Germany and its allies for what they described as punitive conditions akin to those of the Treaty of Versailles, which imposed harsh terms on Germany at the end of World War I. |
| Ernest Urtasun, a Spanish member, described the tough measures demanded of Greece as a “Kamikaze economic program,” imposed as a “political punishment” against Syriza because of its defiance of Europe’s dogma of austerity. Dimitrios Papadimoulis, a moderate member of Syriza, complained that European institutions and common European interests had all been sidelined by a “very strong punitive logic” imposed by Germany. | Ernest Urtasun, a Spanish member, described the tough measures demanded of Greece as a “Kamikaze economic program,” imposed as a “political punishment” against Syriza because of its defiance of Europe’s dogma of austerity. Dimitrios Papadimoulis, a moderate member of Syriza, complained that European institutions and common European interests had all been sidelined by a “very strong punitive logic” imposed by Germany. |
| But at the other end of the political spectrum, conservative politicians in the European Parliament said they welcomed the tough conditions imposed on Greece as the only way to ensure that new bailout money was not wasted. | But at the other end of the political spectrum, conservative politicians in the European Parliament said they welcomed the tough conditions imposed on Greece as the only way to ensure that new bailout money was not wasted. |
| Dariusz Rosati, a member of Parliament from Poland, said his country had roughly the same income levels as Greece but far lower pensions. “This is simply unsustainable,” he said. “We have to make sure that this program is implemented. As there is no trust between Greece and Europe, we have to be very strict.” | Dariusz Rosati, a member of Parliament from Poland, said his country had roughly the same income levels as Greece but far lower pensions. “This is simply unsustainable,” he said. “We have to make sure that this program is implemented. As there is no trust between Greece and Europe, we have to be very strict.” |
| But the eurozone finance ministers, by endorsing the start of a formal procedure aimed at granting Greece its third bailout in five years, on Thursday overcame strong doubts in some countries over whether Greece will actually carry out the tax increases, pension cuts and other measures that Greek lawmakers approved early Thursday. | But the eurozone finance ministers, by endorsing the start of a formal procedure aimed at granting Greece its third bailout in five years, on Thursday overcame strong doubts in some countries over whether Greece will actually carry out the tax increases, pension cuts and other measures that Greek lawmakers approved early Thursday. |
| Such doubts were fed by Mr. Tsipras, the leader of the leftist Syriza party, who told the Greek Parliament that he had strong reservations about the measures, but that he was reluctantly backing them as the only way to keep Greece in the eurozone. | Such doubts were fed by Mr. Tsipras, the leader of the leftist Syriza party, who told the Greek Parliament that he had strong reservations about the measures, but that he was reluctantly backing them as the only way to keep Greece in the eurozone. |
| Peter Kazimir, the finance minister of Slovakia, one of the countries that has taken a consistently hard line toward Athens, gave voice Thursday to worries that Greece might again back away from its promises — as it often did under previous governments. | Peter Kazimir, the finance minister of Slovakia, one of the countries that has taken a consistently hard line toward Athens, gave voice Thursday to worries that Greece might again back away from its promises — as it often did under previous governments. |
| “The real trouble and challenges,” Mr. Kazimir said, “may come later.” | “The real trouble and challenges,” Mr. Kazimir said, “may come later.” |