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Czech PM refuses to guarantee loan to Greece

Xinhua, July 14, 2015 Adjust font size:

Czech Prime Minister Bohuslav Sobotka and Finance Minister Andrej Babis said here on Monday that the Czech Republic refuses to guarantee a possible loan to Greece and it will not grant any direct loan to it.

The EU is contemplating temporarily using the old tool known as the European Financial Stabilisation Mechanism (EFSM). EFSM loans are guaranteed by all EU countries, not only members of the euro zone.

Sobotka said that it is better to have an agreement with tough conditions for Greece rather than a totally collapsed state within the EU and NATO. He said that if Greece wants further help, it must implement reform measures. He said European solidarity had its limits and boundaries.

Babis said that within the mechanism of EFSM, other EU countries are pushed into the problem too. He said the European Council said in the past that this mechanism would no longer be used after June 2013, and the Czech Republic refuses any guarantees for the Greek debts.

Babis said Czech position is that "we do not want the mechanism to be used. And if it is, only temporarily." Babis reiterated that the best solution would be Greece's departure from the euro zone and a partial write-off of its debts. He said the solution is "political, not pragmatic."

Czech President Milos Zeman said on Monday that the agreement with Greece is very fragile because Greece has several times promised something, but never fulfilled it. He dismissed the idea that the Czech Republic should provide any guarantee for a loan to Greece. He said he considered such an alternative very negative. He believes that Czech taxpayers should never pay Greek debts.

The Czech Republic would need to provide guarantees for 1.13 percent of the possible loan if the EFSM were approved. Babis will represent the state to negotiate on Tuesday's EU finance ministers' meeting. Endit