Despite endless promises to the contrary, British money will be used to help rescue Greece in a bid to keep the Euro currency alive. Almost £850 million of British taxpayers’ money is to be handed over after Brussels decided that a promise to confine bailout payments to other eurozone countries was not legally binding.
But in a brazen act of political dissembling, Osborne has nonetheless declared the payment “a victory”.
Greece is currently in need of a £7 billion bailout package by Monday if its banking system is to be saved from collapse. The UK had been resisting calls to contribute to the funds, citing an opt-out secured by Prime Minister David Cameron in 2010. However, Brussels has now decided that that opt-out has no legal force and has insisted that Britain pay up.
The Chancellor George Osborne agreed last night to contribute £850 million, but only on the condition that the money is ringfenced to ensure that the cash will still be paid back even in the event of a Greek default. Somewhat laughably, Brussels has agreed that the ringfence will be legally binding.
According to the Guardian, if Greece were to default, Britain and other non-Eurozone countries who have similarly had their donations ringfenced would be paid back from the profits made on holdings of Greek bonds by the European Central Bank.
Spinning wildly, Osborne declared that the deal was a “significant victory and strengthened the protections for the UK in the latest Greek bailout and any future bailouts of eurozone countries”. He added:
“I said British taxpayers’ money would not be on the line in any agreement and that’s precisely what we have achieved.
“I made clear to my European counterparts that this was an absolute red line for Britain. While we have sought to be constructive and want to see a stable solution to the Greek crisis, it could not have been right for Britain to have allowed its taxpayers’ money to be on the line in what is an issue for the eurozone itself to resolve.
“These have been tough talks, but the agreement announced this evening means an impregnable ringfence around British taxpayers’ money, which will not be at risk in any way in this emergency financing for Greece.”
Conservative MEP Daniel Hannan has commented: “David Cameron didn’t just get a gentlemen’s agreement; he got a binding, written guarantee. Yet, the moment that guarantee became inconvenient, Jean-Claude Juncker and his fellow Commissioners – to say nothing of the other heads of government – tore it up.
“The really outrageous thing is not so much the cash as the dishonesty. I mean, don’t get me wrong, the cash matters. This is, as the French say, an important amount of money.
“But even if it’s paid back promptly, the EU has shown itself so untrustworthy, so unable to keep to a contract, that Britain’s coming renegotiation must be considered a waste of time.”
The former Greek finance minister Yanis Varoufakis admitted back in March that Greece would never repay its debts – and said that other EU ministers have known this for years.
In a documentary aired by the German public broadcaster ARD, Mr Varoufakis said:
“Clever people in Brussels, in Frankfurt and in Berlin knew back in May 2010 that Greece would never pay back its debts. But they acted as if Greece wasn’t bankrupt, as if it just didn’t have enough liquid funds.
“In this position, to give the most bankrupt of any state the biggest credit in history, like third class corrupt bankers, was a crime against humanity.”