June 19, 2012 / 5:42 PM / 5 years ago

Patience wearing thin with Greece, Estonia says

TALLINN (Reuters) - Euro zone voters are becoming increasingly resistant to boosting bailout funds for troubled debtors like Greece, the prime minister of one of the bloc’s smallest and poorest nations, Estonia, said on Tuesday.

Prime Minister Andrus Ansip, whose nation of 1.3 million switched to the euro at the start of 2011 after two years of budget cuts, said there was an increasing split between voters and their elected representatives over increasing the European Union’s bailout funds, the EFSF and ESM.

“In all the other EU member states there are difficulties,” Ansip told Reuters in an interview.

Asked if patience in the bloc with Greece was wearing out, he said, “Yes.”

He spoke after a euro zone official told Reuters that international lenders and Greece would renegotiate the program on which the second bailout for Athens, worth 130 billion euros, was based.

Estonia’s economic output per head is around 60 percent of the EU average. Hit hard when the global credit crunch burst a local property bubble in 2008, its economy shrank about 14 percent in one year in 2009 but it stuck with austerity measures to qualify for euro entry.

“It is very difficult to explain to people why governments are not able to find some additional funding to increase salaries of teachers and why it is that they are able to easily find some financing to support Greece,” Ansip said.

Fears are also growing that the bloc’s fourth biggest economy, Spain, will be forced to seek aid after agreeing a 100 billion euro ($125 billion) lifeline for its banks.

“People are not prepared to increase the volumes in EFSF and ESM anymore,” Ansip said, referring to the temporary bailout fund and the permanent one which is replacing it.

Unlike neighboring Latvia, which had to take an IMF-led rescue when the crisis hit in 2008, Estonia was able to dip into reserves it had built up during the good times to cushion the austerity blow. Even so, the government raised taxes and cut spending in measures worth about 9 percent of output.

Ansip said the EFSF and ESM bailout funds were symbols of European solidarity, but also offered some protection for countries seeking to limit their liabilities to debtor nations.

However, “public opinion is not able to understand why it is needed to invest huge amounts of money into EFSF or ESM. Public opinion thinks we are just poor Estonian people helping rich Greek people,” he said.

He said German politicians faced the same issues.

“Those poor members of the Bundestag, they voted to join the EFSF, but more than 60 percent of people in public opinion polls are strongly against joining the EFSF,” he added.

Lining up with Germany, he said his country remained opposed to the idea of issuing joint euro zone bonds to calm the crisis.

“Credit was cheap for all the countries” in the lead up to the crisis, he said. “It was a big mistake. So now I don’t think it would be reasonable to return to the situation which led us to this crisis.”

Reporting by Patrick Lannin; Editing by Ruth Pitchford

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below