To recall, last March, the Euro zone leaders agreed on a Greece’s aid plan, drafted by Angela Merkel and Nicolas Sarkozy, combining bilateral loans from eurozone countries and IMF support. Moreover, they agreed that such mechanism will be only activated if the Greek government asks for financial support and it will “be considered ultima ratio, meaning in particular that market financing is insufficient.” On 23 April, Greece has made a formal request for emergency financial aid from the Eurozone and IMF.
The Eurozone’s response to the Greek crisis has exposed its weakness. In fact, it has no experience of dealing with these situations and it has failed in all shapes and forms.
On 2 May the Euroarea finance ministers agreed to activate the financial aid to Greece through bilateral loans which are pooled by the European Commission. They agreed a three year joint lending programme aimed at avoid a sovereign default by Greece, and prevent a crisis of confidence from spreading to other Euro zone countries. The financial aid facility to Greece worth € 110 billion is funded jointly by the Euro zone member states (€80 billion) and the IMF (€30bn).
This was another political fix as there is no legal basis in the Treaties for the Euro group agreement. In fact, it ignores the "no bailout" clause included in the Maastricht Treaty and today provide in Article 125 TFEU. In fact, the loans breaches the treaty’s provisions as member states will became liable. The Treaty forbids member states for being liable for the debts of another. The rules were introduced to avoid situations as the present one whereas Eurozone member states have been disregarding the SGP rules running large debts and deficit, threatening to default, weakening the euro, and now the other Euro area members pay for their debt, being forced to issue debt as well to fund the rescue operation.
All Eurozone countries contribute to the support mechanism according to their proportion of capital in the European Central Bank.
However, all EU Member States are facing financial difficulties.
In fact, yesterday Slovakia put its foot down and refused to contribute to its share of the €110 billion rescue package for Greece. The Slovak parliament rejected a bilateral loan worth 816 million to Greece.
Unsurprisingly, the European Commission condemned the Slovakia’s parliament vote. According to the EUobserver Olli Rehn, economic and monetary affairs commissioner, said "The eurogroup's decision [to create the Greek bail-out fund] was a crucial act at a critical moment to safeguard financial stability of the euro area as a whole, including Slovakia. I can only regret this breach of solidarity within the euro area and I expect the eurogroup and the [economic and finance ministers'] Council to return to the matter in their next meeting," Moreover, he stressed that "This development does not put in danger the loan to and the reform programme of Greece, which is proceeding rigourously."
On the other hand, Slovak finance minister Ivan Miklos said "I do not consider it solidarity if it is solidarity between the poor and the rich, of the responsible with the irresponsible, or of tax payers with bank owners and managers (…)”
