Muscat rules out haircut, ‘Greferendum puts eurozone between a rock and a hard place'

Last Sunday’s referendum in Greece has strengthened the hand of their Prime Minister Alexis Tsipras but has weakened the “Greek cause” as it has “antagonized” several European countries, Prime Minister Joseph Muscat said.

Delivering a ministerial statement after Tuesday’s urgent Eurogroup meeting, Muscat said that it was “irresponsible” for Tsipras to call a referendum on the bailout conditions.  

“Of course the Greek people were going to vote against pension and salary reductions, just as it would be obvious what the result would be if we were to put a referendum to all the other Eurozone countries on whether Greek’s debt should be pardoned,” Muscat said.

He criticised Greece for not submitting a fresh proposal during Tuesday’s Eurogroup summit, and simply an informal letter requesting aid from the ESM.

“Yesterday’s meeting was a waste of time, time that would have been better spent discussing a Greek proposal,” he said, reiterating Malta’s stance against a debt haircut to Greece but in favour of discussions on debt restructuring.

Muscat said that Malta's position was clear and that it would not accept a haircut on Greek debt, save for more flexible conditions on the debt.

He said he would not accept any temporary agreement without prior actions and a clear reform plan. "The way forward is for Greece to present a detailed proposal that can be discussed with the institutions. If there is a basis for agreement it will be presented to the finance ministers on f the Eurogroup on Saturday."

The next step would be discussing that agreement on Sunday during the European Council, with all heads of state.

Muscat described the Greek referendum as legitimate but irresponsible, arguing that it delivered the obvious 'no' to a proposal to raise taxes and pensions. "It would be likewise obvious what the answer would be if we ask the people of 18 other states if they agree that Greece's debt is forgiven."

Opposition leader Simon Busuttil appealed to Muscat to double his efforts to ensure that Malta’s interests are safeguarded in the potential case of a Grexit.

He said that Malta and other EU countries aren’t tied down to the referendum result, repeating that solidarity with Greece must come hand in hand with responsibility from the Greek government.

“Of course, we don’t want to see the Greek people suffering but we must first understand the root cause of their suffering,” he said. “When we lent Greece money in 2010, they were a richer country than us with regards GDP per capita in purchasing standards.

“The truth is that you don’t get anywhere in life without making sacrifices,” he said, adding that Greece remains richer than Croatia, Romania, Bulgaria, Poland and Latvia. “Malta sacrificied a lot to get into the Eurozone, but it was worth it as it helped us through the worst financial crisis that the world has ever seen.”