Berlin stricter on new Athens bailout

It stresses 'quality before speed' as Greece holds talks with creditors on fresh loans

BERLIN • Germany pressed yesterday for strict conditions to be attached to a new bailout accord for Greece, arguing for aid payments to be tied to Athens' reform progress, and holding out the possibility of a delayed final deal.

The hard line reflected popular misgivings in Germany about funnelling yet more aid to Athens and policymakers' loss of trust in the Greek government of left-wing Prime Minister Alexis Tsipras. Germany is the euro zone country that has already contributed most to Greece's two bailouts since 2010.

An accord for up to €86 billion (S$131 billion) in fresh loans to Greece must be in place by Aug 20, when a debt repayment to the European Central Bank (ECB) is due.

But Germany stressed its wish for "quality before speed" in the negotiations and held out - as it has before - the possibility of a temporary bridge financing arrangement if a sufficiently thorough bailout agreement is not reached in time.

"It is sensible - that is our belief - to fix the size of the first payment tranche to the extent of the reforms implemented," Finance Ministry spokesman Juerg Weissgerber told a regular government news conference. "That means strict conditionality for financial help." He added that Germany wants a deal that includes an ambitious budget plan, a credible privatisation strategy and sustainable pension reform.

Germany's call for a measured, strict approach came as Greece and international creditors sought to put final touches on a multibillion bailout accord to keep the country financially afloat.

Greek ministers and representatives of European institutions and the International Monetary Fund resumed talks earlier yesterday after a marathon overnight session.

Stressing that Germany is not involved in the negotiations, Mr Weissgerber said Berlin would need time after any accord to review the results of the talks, which would subsequently be put to a parliamentary vote. "We are ready to do this examination quickly, this week if necessary, but quality comes before speed," he said.

Greek officials have previously said they expect the bailout to be agreed in time to allow a first disbursement of aid from the European Stability Mechanism (ESM) in time to allow Athens to make its debt payment to the ECB.

But Mr Weissgerber held out the possibility of missing the Aug 20 deadline: "Should a first ESM tranche not be possible in August, then we would have to discuss renewed bridge financing," he said.

Last month, German lawmakers gave their go-ahead for the euro zone to negotiate a third bailout for Greece, but almost a fifth of Chancellor Angela Merkel's conservatives voted "no". REUTERS

A version of this article appeared in the print edition of The Straits Times on August 11, 2015, with the headline 'Berlin stricter on new Athens bailout'. Print Edition | Subscribe