Cameron pledges vigilance after fighting off bill for Greek bailout

Prime Minister David Cameron vowed yesterday to remain “eternally vigilant in all matters European” after heading off a big British bill for a second EU bailout for Greece.

After a summit in Brussels he said he had received the assurances he sought that Britain will not be required to make loan guarantees to the Greeks when a massive rescue package is put together later this year.

Mr Cameron said: “We were not involved in the first Greek bailout. We haven’t been involved in talks about potential Greek bailouts. So I think it was absolutely right not to use the European Financial Stability Mechanism – the EFSM – for future payments in terms of Greece.”

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But, aware that he could be outvoted if other member states decide to involve Britain by using the mechanism, he added: “I wanted to seek assurances at this European Council that Britain won’t be called on... I have received those assurances – but nevertheless I will continue to be vigilant on this issue.”

He added: “You have to be eternally vigilant in all matters European.”

Britain’s only contribution to the multi-billion-pound bailout will come through its membership of the International Monetary Fund, which is expected to offer further support – committing about £1bn from the UK in loan guarantees.

More pressing is the dispatch of a 12 billion euro (£10.7bn) slice of the current bailout package, which Greece needs by July 15 to cover its immediate short-term debts.

That payout, and the carrot of a second big bailout in the autumn, are now directly linked to approval by the Greek Parliament next week of tougher austerity measures – with the implied threat of non-payment if the Greek centre-right opposition carries out its threat to vote down the austerity programme.

The summit conclusions have called on “all political parties in Greece” to support the austerity programme, and insisted: “Given the length, magnitude and nature of required reforms in Greece, national unity is a perquisite for success”.

Mr Cameron also claimed a victory in seeing off attempts to change European laws on migration which could have stopped Britain from sending asylum seekers back to other EU countries.

As up to one million people are believed to have fled Libya during the current unrest and tens of thousands are attempting to cross from north Africa into Europe, the European Commission has floated proposals to suspend current arrangements which require asylum seekers to be returned to the country through which they entered the EU.

The change could mean an additional influx of migrants to Britain, which is a magnet for many people who enter the EU by clandestine routes via countries like Italy, Greece and Spain.

But Mr Cameron said afterwards: “Britain and Germany together made sure that these proposals aren’t even referred to in any way in the summit conclusions.

“I think that is important. We want controlled migration in Europe and controlled migration above all in Britain.”

Mr Cameron used the summit to call for greater efforts to cut red tape, particularly for small businesses, as a key element in reviving growth across Europe. He said his call for businesses with 10 employees or fewer to be exempted from most Brussels regulation had won support from several other EU states.

In the midst of the Greek crisis and growing concern that the euro crisis could seriously undermine the whole European Union project, the summit welcomed the impending extension of the EU to 28 countries, Croatia expected to join in July 2013.

The summit declaration said Croatia’s intensive efforts to meet EU membership requirements had “brought a new momentum to the European perspective of the western Balkans”.

Mr Cameron was among EU leaders seeking close monitoring of the final stages of Croatian negotiations to ensure the country is fully ready to join on time. The summit text urged Croatia to continue its reform efforts , particularly on the judiciary and fundamental rights, “so as to be able to assume fully the obligations of membership from the date of accession”.

Before returning to London Mr Cameron said he welcomed the fact that Croatia was now very close to joining the EU club.

Greece’s beleaguered government will begin taxing minimum-wage earners and encourage local banks to help the state delay debt payments for bonds maturing as late as 2015.

The announcement came as the government reached a final deal on a £24.8bn austerity package with debt inspectors from the European Union and the International Monetary Fund.

Getting the new spending cuts, economic reforms and privatisations through parliament next week is a pre-condition for Greece to receive more aid, without which it will default on its massive debts.

The deal reached between the Greek government and the debt inspectors contains an additional £3.4bn in spending cuts, an EU official said.