European leaders refuse to release €8bn aid tranche unless Greece adopts reforms

 

By Louise Armitstead, Chief business correspondent

6:33PM GMT 07 Nov 2011

European leaders have refused to release the €8bn (£6.86bn) tranche of international aid to Greece until its new government has "adopted down to the last detail" the Brussels programme of reforms.

Without a cash injection Greece will run out of cash in mid-December.

The tough message was delivered to Greek finance minister Evangelos Venizelos in meetings with Jean Claude Juncker, the head of the eurogroup, and Olli Rehn, the European economic commissioner, ahead of the latest crisis summit. Mr Juncker said: "I expect that the new government will make clear very soon that what was decided on October 26 and 27 here in Brussels will be adopted down to the last detail."

Wolfgang Schauble, the German finance minister, said: "The programme's conditions must be met before we can decide about the payment of the tranche."

Without a cash injection Greece will run out of cash in mid-December.

George Papandreou's threat to hold a referendum on the Brussels accord, which agreed a 50pc write-down for holders of Greek debt as well as a fresh austerity package, triggered chaos for the bail-out agreements.

Following his announcement on Sunday night that he would stand aside for a new government, Mr Papandreou told leaders, including Angela Merkel, that the transition would be smooth. Last night Greece had still not chosen a new leader but Lucas Papademos, a former vice president of the European Central Bank (ECB) remained frontrunner.

 

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Mr Venizelos told reporters it had been "a difficult week" but added: "We have a new government of national unity and national responsibility. This is the proof of our commitment and our national capacity to implement the programme and reconstruct the country."

China said it was still uncomfortable about investing in European debt. The official Xinhua news agency said: "Greece's "referendum drama was a reflection of how loose the [Brussels] deal was, and no one could be sure that no further counter-activities would happen in the coming days".

European leaders refuse to release €8bn aid tranche unless Greece adopts reforms - Telegraph