Eurozone finance ministers have approved a 12 billion euro instalment of Greece's bailout, but signalled that the nation must expect significant losses of sovereignty and jobs. Ministers in the Eurogroup gave the go-ahead for the fifth tranche of Greece's 110-billion-euro financial rescue agreed last year, and said details of a second aid package for Athens would be finalised by mid-September.
But within hours of Saturday's decision, Eurogroup chairman Jean-Claude Juncker warned Greeks that help from the EU and International Monetary Fund would have unpleasant consequences. "The sovereignty of Greece will be massively limited," he told Germany's Focus magazine in the interview released on Sunday, adding that teams of experts from around the eurozone would be heading to Athens.
"One cannot be allowed to insult the Greeks. But one has to help them. They have said they are ready to accept expertise from the eurozone," Juncker said.
Greeks are acutely sensitive to any infringement of their sovereignty and any suggestion that foreign "commissars" might become involved in running the country is an incendiary political issue and could trigger more street protests.
After Saturday's conference call on Saturday, the 17 eurozone ministers agreed the fifth tranche would be paid by July 15, as long as the IMF's board signed off on the disbursement. The IMF is expected to meet on July 8 to approve it.
The payment will allow Greece to avoid the immediate threat of debt default, but the country still needs the second rescue package, which is also expected to total around 110 billion.
Between now and then, finance ministers will work on the "precise modalities and scale" of private creditors' involvement.
Germany hopes this will eventually total around 30 billion euros, with banks voluntarily buying new Greek bonds when old ones they hold mature, meaning Athens would not have to produce cash to repay its creditors immediately.
Juncker also said Greece must privatise on a scale similar to the sell off of East German firms in the 1990s.
"For the forthcoming wave of privatisations they will need, for example, a solution based on a model of Germany's 'Treuhand agency'," Juncker said, referring to the privatisation agency that sold off 14,000 East German firms between 1990 and 1994.
Greece's problems with a lack of economic competitiveness are modest compared with those of eastern Germany, which more than 20 years after communism still has high unemployment.
Juncker made no explicit reference to job losses. But any repeat of Germany's Treuhand experience may prove bitter for Greeks, who are already suffering soaring unemployment as a recession drags into its third year.
Treuhand was supposed to sell state property at a profit but closed with a huge deficit and a legacy of bitterness among the legions of workers whose jobs it destroyed. Four million Germans were employed by Treuhand-owned companies in 1990 but only about 1.5 million jobs were left by 1994.