18.06.2012
By Simon Miller
EU countries have an exposure of €552bn (£444bn) to Greece according to revised figures from the think tank Open Europe.
The comes through various sources including: the two direct bailouts, central bank lending (ECB monetary policy, ECB Securities Markets Programme, Target 2 and Emergency Liquidity Assistance) and exposure of these countries banking sectors to Greece.
According to Open Europe, this represents a massive 67% increase since June 2011, "despite little progress being made on reforming the Greek economy or solving the wider problems in the eurozone".
The UK has an exposure of €13.5bn although these are mainly tied up with commitments to the International Monetary Fund (IMF) and may not be called upon, especially since the Fund would continue assisting Greece in the case of an exit.
In a QnA following the Greek election which saw New Democracy become the largest party with 129 seats compared with anti-austerity party Syriza with 79, Open Europe said it was still unlikely that the country would meet the various austerity targets.
"Even with adjustments to the bailout programme, it still looks virtually impossible for the country to meet the various austerity targets. Missed targets will continue to be a source of disagreements and controversy, particularly inside Germany, while the continued EU/ECB/IMF Troika presence on the ground in Greece means that any delays will come to light quickly. Therefore, Greece’s future in the eurozone remains uncertain. For the single currency as a whole, should a compromise be possible in Greece, the focus of attention will shift back to Spain – whose banks remain a major liability for the euro," it wrote.
Open Europe said it would be politically difficult for Germany, Finland and the Netherlands to get the parliamentary approval for a third bailout.
It continued: "From the Greek side, it is hard to imagine even a pro-euro coalition signing up to a new strict ‘Memorandum of Understanding’ detailing further ‘austerity’ for Greece. At best, extra cash might be put on the table if a move towards a fiscal or banking union is close, but this will not happen anytime soon.
"We expect that a more fundamental decision over Greece’s eurozone membership will need to be made before this money runs out, within the next six to nine months."
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