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No thanks!

Bernd Riegert, Vilnius / bk
September 14, 2013

EU finance ministers have offered Slovenia help in rescuing its ailing banks before things get worse. Five countries are now part of Europe's bailout scheme - but Slovenia does not want to be the sixth.

epa03865605 Lithuanian Minister of Finance Rimantas Sadzius (R) welcomes Slovenian Minister of Finance Uros Cufer during an informal meeting of European Union Finance Ministers in Vilnius, Lithuania, 13 September 2013. EPA/VALDA KALNINA LATVIA OUT/LITHUANIA OUT/ESTONIA OUT
Image: picture-alliance/dpa

At an informal meeting in the Lithuanian capital Vilnius, Slovenian Finance Minister Uros Cufer had to explain to his 16 eurozone counterparts exactly how his country intends to get out of a banking crisis that is threatening the country's financial system. Eurogroup chief Jereon Dijsselbloem had rather suddenly put Slovenia on the meeting's agenda. For years, Slovenia's banks have been sitting on bad mortgages estimated at around 7 billion euros ($9.3 billion).

The government now wants to liquidate two of the smaller banks and then inject an extra billion euros into the system, Cufer explained. "We still have enough money in the coffers," he said curtly. But Dijsselbloem, also the Dutch finance minister, made clear that this can only be the beginning of a more a thorough restructuring program.

German Minister of Finance Wolfgang Schaeuble and member of the Executive Board of the European Central Bank Jorg Asmussen (L) during an informal meeting of European Union Finance Ministers in Vilnius, Lithuania, 13 September 2013. EPA/VALDA KALNINA LATVIA OUT/LITHUANIA OUT/ESTONIA OUT
Schäuble is happy to let Slovenia go it aloneImage: picture-alliance/dpa

"Slovenia already began to liquidate two smaller banks last Friday," he said after the talks. "We have underlined how important it is that Slovenia seeks advice from the European Central Bank and the European Commission, and aspires to cooperate in order to solve its problems in the finance sector."

Slovenia: the sixth crisis country?

The ECB wants Slovenia to end months of hesitation and finally get money from the European Stability Mechanism - the EU's central bailout fund. It no longer wants to have to keep the majority of the country's 18 banks above water with emergency loans. But in the face of bad reports from the ratings agencies, the Slovenian government is struggling to borrow new money to service its bank bailouts. And yet it still resists going to the ESM.

German Finance Minister Wolfgang Schäuble is also less than eager to discuss new European rescue packages just a week ahead of the German election. "Slovenia says itself it doesn't need the money. I think if they stick resolutely to the course they say they will, then they will make it without help."

Too early for more Greece talks

The bigger bailout candidate remains Greece, which has already received some 350 billion euros in international aid. This Monday (16.09.2013), the "troika" - the European Commission, the ECB, and the International Monetary Fund - is set to begin the latest inspection of the state finances and economic reforms. Then in December, when the troika will present the latest figures, Dijsselbloen wants to begin discussing how much additional money Greece will need after the current bailout package runs out at the end of 2014.

Schäuble is in no hurry to continue discussions about Greece. He recently repeated a statement that caused controversy during the election campaign: "Since the program is to run to the end of 2014, but according to the troika's analysis Greece's debt capacity will only be reached in 2022, it is clear that there could be a need for more financing after the end of this bailout program. Whether and what that will be, we will discuss in mid-2014."

The question of whether Greece will need a debt clearance from its state creditors - or another bailout package from the ESM - was not on the official agenda in Vilnius. A debt cut can neither be ruled out nor supported at this point, said Jannis Emmanouilidis, economist at Brussels think tank the European Policy Centre. "All these discussions are still very vague up until now, and they talk about figures that could end up being bigger or smaller. What is certain is that there will be more support measures beyond what has been agreed so far. The question is what form."

Programs for Spain, Ireland, and Portugal about to end

At this meeting, the finance ministers were clearly just content to keep things rolling. Decisions were put off until after the German elections, when it becomes clear who will be the next finance minister in Berlin. Germany is the biggest economic power in Europe, and it also carries the biggest euro bailout burden.

"In the coming nine months, the programs in Spain, Ireland, and Portugal will expire," said Olli Rehn, EU commissioner for economic and monetary affairs. "As you know, we have to make important decisions about Greece. There won't be any cookie-cutter recipes."

Jonas Cicinskas, Professor of European Studies, Institut für Internationale Beziehungen und politische Wissenschaften, Universität Vilnius, Wilna, Litauen. Aufgenommen 13.09.2013 in Vilnius Foto: Bernd Riegert / DW
Cicinskas is surprised that there has not been more unrest in the Baltic eurozone countriesImage: DW/B.Riegert

Lithuania needs no help

In Lithuania, host for the meeting, discussions about the bailout packages in southern Europe are being followed with a amount of certain sympathy. Lithuania has been through an economic and financial crisis of its own, during which salaries dropped by 30 percent in real terms.

Greece is a long way from that, said Jonas Cicinskas, professor of European studies at the University of Vilnius, but he wonders why northern Europeans are apparently more immune to suffering. "I'm always surprised about how societies in the Baltic countries have managed to avoid that public discontent. My answer is that we are just more used to deprivation," he said.