They were published on Sunday by Bild, but are really hitting headlines now.
The German paper claims to have obtained a copy of the €80bn eurozone bailout agreement for Greece — and is “exposing” the secret clauses that let ze Germans (and others) off the hook.
The Bild article is available here, click below to see the purported documents:
We’ve (roughly) translated and summarised the main points from the Bild story for you below:
- Greece doesn’t have to repay the loan for up to three years.
- The loan can have a maximum term of five years.
- The euro countries are offering up to €80bn, with a minimum draw-down of €1bn.
- Greece must pay lenders a “service fee” of 0.5 per cent on the loan.
- In the first three years, Greece has to pay a 3 per cent premium over Euribor. After that the premium increases to 4 per cent, and by two percentage point increments thereafter.
- Greece has a duty to prevent fraud, corruption and other “irregularities” in the adoption of the loan. Athens has to allow inspectors unrestricted access to check up on how the loan is being used.
- Greece has to repay the loan on a pro rata and pari passu basis to all lenders — i.e. there can’t be a preference for individual states in the repayment waterfall.
- If lenders can’t extend credit to Greece, for instance because of political reasons, the initial loan can be financed by just some of the eurozone lenders.
- If a country has to borrow to lend funds to Greece, and if its borrowing expenses are more than the interest rate paid by Greece, the lender can ask other eurozone states to pay the difference. If the latter refuse to pay the difference, the country could refuse to lend to Greece altogether.
- If a constitutional court in a eurozone country, or the European Court, rules that the loan to Greece violates national or European Union law, the loan agreement for the country, or the eurozone as a whole, would be void.
The last two points are really where the contention comes in, as it looks, at first blush, like eurozone countries have just given themselves a lot of leeway to avoid das Bailout(s). A complaint, for instance, has already been filed in the German courts challenging the legal status of the move.
No surprise then, that the Bild article ends with the below “plain language” summary for its readers:
Klartext: Entscheidet das deutsche Bundesverfassungsgericht gegen die Euro-Milliarden-Hilfe, ist unser Vertrag mit den Griechen nichtig. Wir müssen nichts mehr zahlen!
In English, that’s:
If the German Federal Constitutional Court decides against the billion-euro assistance, our contract with the Greeks will be void. We won’t have to pay anymore!
Related links:
Who’s buying Greek bonds? – FT Alphaville
Handelsblatt illustrates German opposition – The Big Picture
Germany’s plan to deal with budget transgressors - FT Alphaville