MercoPress. South Atlantic News Agency

Greece warned aid package means significant losses of “sovereignty” and jobs

Euro-group chairman Jean-Claude Juncker: “sovereignty will be massively limited”

Euro zone 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 Euro group 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 the decision, Euro-group chairman Jean-Claude Juncker warned Greeks that help from the EU and IMF 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 Euro zone 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 Euro zone,” 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.

On Saturday, the 17 Euro zone ministers agreed the fifth tranches would be paid by July 15, as long as the IMF 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 Euros.

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.