Cyprus and Greece were set to overshadow talks by eurozone finance ministers on Thursday, with fresh trouble brewing in the two bailed-out countries.
The Greek ruling coalition has been shaken by a dispute over Prime Minister Antonis Samaras’ decision to close public broadcaster ERT.
The premier failed to bridge differences with his coalition partners Wednesday; their talks were to continue late Thursday.
The rift in the coalition government has raised the possibility of snap elections being called, just one year after the last general election — fueling worries that the country’s international bailout could be destabilised once again.
“In the last week, party politics became more important than the implementation of the (bailout) programme,” one EU official complained Wednesday, speaking on condition of anonymity.
Athens is already struggling to meet the conditions imposed as part of its two international bailouts, which amounted to more than 200 billion euros ($264 billion). This month, a planned privatisation of the national gas company DEPA fell through.
“Greece is ... in a precarious position,” the Capital Economics research group noted, while also predicting that the problems will not pose “a serious near-term threat to Greece’s bailout.” Cyprus secured a 10-billion-euro bailout in April to avert bankruptcy. But Cypriot President Nicos Anastasiades has raised eyebrows by requesting moderations so that the Bank of Cyprus — the country’s largest lender — can be safeguarded.
The eurozone’s 17 ministers will discuss what their response should be, diplomats said, while also warning that they don’t expect significant changes to the bailout.
“We see no need for a decision,” one diplomat said.
Also on the ministers’ agenda is Latvia’s accession to the euro, which they are expected to endorse, and rules for the eurozone’s bailout fund to directly recapitalize troubled banks.
Diplomats warned that differences still remain between ministers on the latter, but EU Economy Commissioner Olli Rehn said Wednesday that he expects the Eurogroup “to agree on the principles and rules of a direct recapitalisation instrument.”