Sunday 26 March 2017

Greece to vote on bailout as deal for Ireland is ruled out

DEBT

Charlie Weston, Personal Finance Editor

GREECE is to call a referendum on its EU/IMF bailout, in a move that could potentially unravel the deal hammered out by European leaders in Brussels last week.

Last night Prime Minister George Papandreou said the referendum would be a straight 'yes' or 'no' to adopting the €130bn package.

Such a vote would be unlikely to pass, and could send the eurozone crisis back into the tailspin seen before last week's agreement.

"We trust citizens, we believe in their judgment, we believe in their decision," Mr Papandreou told ruling socialist party lawmakers.

The news comes as the outgoing president of the European Central Bank warned the partial writedown of Greek sovereign debt should not be repeated for any other eurozone country.

Jean-Claude Trichet told the BBC that Greece was a special case, and hinted that the same latitude would not be extended to other eurozone countries. There have been widespread calls for Ireland to get a similar deal on its crippling sovereign debts to the Greek one.

There is particular annoyance that a payment of €700m will be made to unsecured and unguaranteed bondholders of Anglo Irish Bank this week.

Mr Trichet, who is stepping down and will be replaced by Bank of Italy governor Mario Draghi today, said the Greek debt deal was a "one-off. It is the responsibility of individual countries to fully be consistent with what they said, namely that Greece was Greece, everybody recognises that is a special case. But for all other countries, the signature will be honoured. That is essential."

Eurozone leaders last week agreed the broad strokes of a deal in which Greece will see a nominal 50pc cut in the face value of its bonds held by private investors.

Mr Trichet denied that it was humbling for eurozone countries to seek investment in their sovereign debt from China.

"We are all on the global market, we are all intertwined," he said. "It's a normal way of dealing."

The BBC also cited him as saying Greece's economy should have been more closely scrutinised before being allowed to join the eurozone in 2001.

He said the ECB didn't make any mistakes in its handling of the eurozone's sovereign debt crisis, but rather that any errors were the fault of governments and investors.

Irish Independent

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