Dutch minister pushes for 'ultimate sanction' against Greece

8th September 2011, Comments 0 comments

The chances of Greece being kicked out of the eurozone rose Thursday as the Dutch pushed for the "ultimate sanction" and Germany warned a second bailout may need to be re-negotiated.

The moves came days after a team of experts from the European Union and International Monetary Fund left Greece early saying Athens had yet to adjust its austerity budget to revised growth forecasts far worse than expected.

Already, Finland wants Greece to lodge cash collateral before lending any more money, and Slovakia -- which sat out the first bailout -- is threatening to delay ratification of the second one until the end of the year.

Under a new Dutch proposal that would see eurozone economies in deep trouble placed under the wardenship of currency partners, the "ultimate sanction" would be an exit.

"If you can't stick to rules, you have to leave the game," said Netherlands Finance Minister Jan Kees de Jager.

Spokeswoman Simone Boitelle said this also meant arguing for the eventual rewrite of the European Union's Lisbon treaty.

Dutch premier Mark Rutte's new hardline stance comes seven days before face-to-face talks in Poland among euro and EU finance ministers and was presented as a "last resort."

De Jager said Finland and Germany were on a similar wavelength.

On Wednesday, Germany's top court ruled that bailouts are legal -- but ordered much more say for lawmakers, reflecting a step-change in public opinion.

Ratcheting up the pressure on Athens, German Finance Minister Wolfgang Schaeuble told his parliament that the deal for a second, 159-billion-euro ($225 billion) bailout, agreed at an emergency July 21 summit by his Chancellor Angela Merkel, was "very premature."

"At the end of the day, it is up to Greece itself to decide whether it is ready to take the necessary measures to reduce its deficit and its too-high debt," Schaeuble said.

The Greek government is currently scrambling to come up with new financial planning to prevent a debt burden of more than 350 billion euros spinning "out of control," as budget officials recently put it.

Greece's economy shrank 7.3 percent in the second quarter as a brutal recession exacerbated slippage in Greek budgetary targets.

The EU and IMF cut short their inspection visit to Athens last week, putting the release of the next eight-billion-euro tranche of loans from the first, 110-billion-euro bailout in doubt.

With the team due back next week, a Greek government spokesman said "there is no issue regarding the fixed loan installment because we are doing what we must."

The first eurozone state to do so, France was expected to approve its contribution to the second bailout on Thursday -- but former European affairs minister Jean-Pierre Jouyet said that wardenship was becoming an option.

The July 21 deal, which also relies on private investors restructuring tens of billions of euros in debt, was already mired in disagreements before the Dutch proposal.

The Hague also wants to see the creation of a new post of eurozone budgetary tsar, and the resurrection of "loss in voting rights" for non-compliant countries.

De Jager said these ideas were welcomed by his German and Finnish counterparts, who he met in Berlin on Tuesday.

But the European Commission, a key part of the "troika" auditing Greece, insisted that Greece cannot be forced out.

"Neither exit nor expulsion from the euro area is possible, according to the Lisbon treaty under which participation in the euro area is irrevocable," said Amadeu Altafaj, spokesman for EU economic affairs commissioner Olli Rehn.

Altafaj called on eurozone actors to "stay focused" on ratifying the July 21 deal and adopting a so-called 'six-pack' of draft laws covering states' budgetary engagements.

"The normal consequence of a deviation is a sanction, and that's covered by the six-pack," he said.

© 2011 AFP

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