EU COMMISSION chief José Manuel Barroso has said the union’s executive would be able to give special fiscal support to Greece without breaching the “no bailout” rule that prohibits overdraft facilities for distressed governments.
Mr Barroso also said the commission would examine closely the relevance of banning “purely speculative naked sales” of insurance against the risk of sovereign default, a market widely held to have intensified pressure on Greece amid anxiety about its budget deficit.
While leaving open the question of whether changes to the EU treaties would be required to create a mooted European Monetary Fund (EMF), Mr Barroso said yesterday that a once-off intervention in Greece could be executed within the confines of existing European law.
“The commission has been actively working with euro area member states to design a mechanism which Greece could use in case of need,” he said in a statement issued in Strasbourg, where he addressed MEPs.
“Such a mechanism would be in conformity with the current Lisbon Treaty, in particular with the no-bailout clause. It would include stringent conditionality.”
Mr Barroso’s remarks came as Greek prime minister George Papandreou prepared to meet US president Barack Obama in Washington in a further attempt to garner support for his administration.
Debate in Brussels about a possible EMF is dominated by doubt over the possibility of introducing such a scheme without first changing the European treaties, something EU leaders are loath to do.
Also at issue is whether member states would have to contribute to any EMF, another question on which the commission remains silent.
Although German chancellor Angela Merkel has said the treaty changes would need to find a way around the bailout clause, a spokesman for EU economics commissioner Olli Rehn avoided saying whether the commission agreed.
The spokesman said “no” when asked whether the EU executive believed Dr Merkel was wrong, and said all contributions to the debate were welcome when asked if she was correct. On the question of whether non-euro states would be able to participate in any EMF, he said that discussions “at this point” centred on members of the single currency.
“The European Monetary Fund is, however, a longer-term proposal which may well require a change in the treaty,” Mr Barroso told the European Parliament in Strasbourg.
Although the no-bailout clause bans overdraft facilities or any form of credit in favour of member states, EU law allows “union financial assistance” where a member state “is seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control”.
However, officials and diplomats briefed on the discussions between member states and the commission said it would be very difficult to construe that provision as allowing the establishment of a permanent framework available to more than one member state.
Mr Barroso did not address that question in his statement yesterday.
“The commission is ready to propose a European framework for co-ordinated assistance, which would require the support of euro-area member states,” he said.
