Submitted by Toni Straka of The Prudent Investor
Austria's Green Party In Position To Kill The Greek Bailout Package
While EU leaders look forward to a multitude of emergency meetings until July 20, when Greece has to pay back a government bond with a volume of €6.6 billion, the fate of Greece's bailout may ultimately lie in the hands of the Green party in the dwarf nation Austria.
Austria's Green Party sent an open (German language) letter to the country's chancellor Werner Faymann on Thursday, threatening to boycott a vote in the Austrian parliament where a 2/3 majority is needed for a change of the constitution that would allow Austria to participate in the €138 billion bailout package for the Hellenic peninsula. As a Euro member Austria has the obligation to take part in the bailout that is hugely unpopular with voters/taxpayers.
The Greens got 9.8% of the votes in Austria's latest elections, making them the 4th biggest party in the five party Austrian parliament.
In their German language letter published on the party's website the Greens demand 2 key adaptions of the bailout package from Austria's socialdemocrat-conservative coalition government. The letter is signed by Chairwoman Eva Glawischnigg, budget speaker Werner Kogler and foreign policy speaker Alexander van der Bellen.
- Firstly the Greens demand an obligatory inclusion of private creditors (that's the banks) and the regulatory introduction of an orderly default mode for bankrupt Euro members that shall be part of the final version of the legislature of the moneyless €750 billion European Stability Mechanism (ESM) that shall come to life in 2013 when the current European Financial Stability Facility (EFSF) will end. The greens explicitly noted that chancellor Faymann should inform the other Euro governments of their intention to block a constitutional change for the ESM if such measures are not taken.
This initiative finds my full support as it is clearly written on the wall that the Eurozone will see more defaults than Greece only. This was also indicated by Dutch central bank governor Nout Wellink last week. He proposed to double the ESM to an almost unimaginable €1.5 Trillion. This sum may still not be enough as Greek debt currently stands somewhere between €310 billion and €467 billion.
Europe needs a clear framework for such events that are historically much more frequent than politicians want to admit. In the last 2 centuries almost every European country has defaulted at least once. It was a major political blunder in the creation of the Euro not to include rules for those who turn out to be too weak for the Euro.
- Secondly the Greens would support the issuance of Eurobonds by the European Central Bank (ECB) as proposed by outgoing ECB President Jean-Claude Trichet, arguing that this would strengthen European solidarity and could also help preventing another attack of speculators on bonds of single countries.