The EU, European Central Bank and International Monetary Fund, which have already postponed completing their latest review of the economy, signalled that rescue funds will not be forthcoming if Greece fails to implement improved competition rules. Prime minister Antonis Samaras's increasingly beleaguered administration has indicated it will be unable to enforce all of the reforms, going so far as to propose alternatives at the weekend.
The stand-off comes as Greece's highest legal body, the court of state, challenged the country's fragile economic recovery by demanding that the military and police be reimbursed for cuts dictated when Athens signed up to a second EU-IMF rescue programme in 2012.
The ruling, which was leaked before being officially announced, described the austerity measures as unconstitutional.
If enforced, the court decision will throw a wrench in the fiscal progress Greece has made since narrowly avoiding bankruptcy by adding a burden of anywhere between €500m and €1bn on to the government's extremely tight budget.
That, say officials, would in effect wipe out the €800m primary budget surplus – before debt repayments – the government had hoped to post in 2013, its first in years. The data, which is not expected to be officially available until April, had been hailed as a major victory at a time when the unprecedented fiscal consolidation Greece has achieved is having an ever greater toll on society at large. Athens' fragile two-party coalition had promised that at least 70% of the surplus would be used to redress cuts and benefit losses imposed on pensioners and other Greeks worst hit by the crisis.
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EU financial services commissioner Michel Barnier told reporters that so-called proprietary trading, where banks bet exclusively with their own money rather than customers, would be outlawed.
The practice is often highly profitable for institutions but lawmakers say it serves neither clients or the health of the European economy.
Although proprietary trading now only accounts for a small amount of banking activity, it was used to create the market in sub-prime mortgage loans which led to the financial crisis in 2008-9 and, consequently, publicly funded bank bailouts totalling around 13 percent of the EU's GDP.
The rule, which is similar to the so-called 'Volcker rule' which now applies in the US, would apply to around 30 of the bloc's 8,000 banks which together cover around 65 percent of the total banking assets in the EU.
It would also cover banks which have total assets exceeding €30 billion, and that have total trading activities exceeding either €70 billion or 10 percent of their total assets. Twenty-three EU-based banks are in the world's top 50 largest institutions according to Global Finance magazine.
Berlin - Austerity programmes agreed with the troika of international lenders (the European Commission, European Central Bank and International Monetary Fund) are in breach of the EU's Charter of Fundamental Rights, according to a German legal expert.
Andreas Fischer-Lescano, a professor of European law and politics at the University of Bremen was tasked by the European Trade Union Confederation to look at the legality of so-called memorandums of understanding (MoU) signed between bailed-out countries and their lenders.
He concluded that under the EU charter of fundamental rights, a legal text which became binding for member states in 2009, several austerity measures enshrined in the MoUs can be fought in courts.
"There are certain limits to what you can write in a memorandum of understanding. In a bank contract too, there are limits to what can be written, courts and laws are always limiting that. In international agreements it should be the same, the troika MoU is not beyond the law either," Lescano told this website.
He noted that a recent inquiry by the European Parliament (EP) into the work of the troika was right to question its legal basis, particularly the European Central Bank's lack of a mandate to demand structural reforms from national governments.
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