By Angelika Papamiltiadou

Brussels (MNI) – The Eurozone’s finance ministers have asked Greece
to present a letter written and signed by both main political parties,
stating that they will honour the EMU summit agreement reached October
27 and implement fully all commitments — including a planned 50%
writedown on privately held Greek debt, Eurogroup president Jean-Claude
Juncker said late Monday.

Speaking at a press conference after the meeting, Juncker said that
current Greek Finance Minister Evangelos Venizelos briefed his
colleagues in detail on the political developments in Greece while
pledging that the new coalition government, expected to be announced
Tuesday, will honor the agreed plan.

“We asked the new Greek government to co-sign a letter underlining
the commitments based on the agreement reached Oct 27. We welcome the
intention of Greece to form a unity government and Mr. Venizelos’
commitment to implement the program,” Juncker said.

Upon the submission of the written letter, the Eurogroup will
reconvene later this month to release an E8 billion loan tranche that
has been suspended ever since Prime Minister George Papandreou announced
an ill-fated referendum last week that roiled financial markets.

Once the new government is sworn in, the European Commission,
International Monetary Fund and officials from the European Central Bank
will swiftly return to Greece to begin negotiations for the new bailout
program. The Eurogroup has urged all interested parties to conclude
negotiations on the private sector debt reduction plan and a new EU
bailout program by the end of the year.

A senior government official told Market News International that
Venizelos had informed his peers he will be staying on as minister of
finance.

The same official also said that while there had been an initial
indication that former ECB vice president Lucas Papademos would accept
the position of prime minister in the new coalition government, there
has been “a last minute complication.”

According to the official, Papademos asked to have a say in the
appointment of his aides, who would negotiate the new bailout plan with
the EU and the IMF. He also “asked that the duration of the coalition
government be until all decisions are implemented, meaning end of
March,” the source said.

But the two main parties of Greece, the ruling Socialists and
conservative opposition New Democracy, insist that early elections
should take place Feb 19. That is one of the reasons the Eurogroup
chairman spoke of concluding the deal by the end of the year.

“We want a new bailout plan by the end of the year,” Juncker said.
“The Greek authorities received the mandate to begin talks with the
[Institute of International Finance] and to be in close cooperation with
the Troika. They will report regularly to the Eurogroup and the
EuroWorking Group,” Juncker said. The IIF is a global banking group that
has been representing Greece’s private creditors in negotiations about a
debt haircut.

Olli Rehn, Europe’s commissioner for Economic and Monetary Affairs,
echoed Juncker’s comments regarding the responsibilities of the new
Greek government.

But he declined to comment when asked whether the Troika — the
Commission, the ECB, and the IMF — should accept their share of blame,
since they have been monitoring Greece’s continuous deviations from
fiscal targets for the past few years.

“It is correct that the growth outlook is worse [than forecasted],
but when we started we didn’t have the correct figures,” Rehn said. “Now
we have a better understanding; we have revamped and reformed the
statistics office and we have reliable statistics.”

Asked why the Troika has remained a mere observer to the Greek
government’s failure to combat tax evasion, Rehn replied that “this was
the government’s responsibility and ultimately the Greek people’s.” He
added: “Tax evasion is a serious sickness of the Greek society.”

However, it is a fact that the troika has been submitting positive
reports on Greece every three months for the past two years,
recommending the release of loan disbursements, even though the
government was undershooting its revenue targets and overshooting on
spending.

Asked whether the calls on Greek politicians over the past week to
form a coalition government constituted interference with the sovereign
rights of the Greek people, Rehn said that “he was not the only one that
thought the referendum has a breach of confidence.”

“[On Oct 27] we had clear conditions,” Rehn said. “The euro area
wants to support Greece but Greece must take care of its own
responsibilities.”

Greek finance minister Evangelos Venizelos said in a statement that
“the Eurozone is ready to implement the Oct 27 agreement,” and he noted
that the “Eurogroup warmly welcomed political developments in Greece.”

“As soon as the new government reaffirms in a written letter its
commitment, the [E8 billion] tranche will be released and the Troika
will come to Athens for the necessary negotiations on the new program,”
Venizelos said.

–Angelika Papamiltiadou; a_papmiltiadou@hotmail.com

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