Photographer: Kostas Tsironis/Bloomberg

EU Floats Humanitarian Aid as Possible Salve to Greece Euro Exit

European leaders said they’re now considering humanitarian aid for Greece as a financial bailout moves further out of reach.

All 28 European Union leaders have been summoned to Brussels for a Sunday summit that will consider whether to use the bloc’s budget to help Greeks hardest hit by the crisis in the economy. Euro-area leaders also will meet in case a last-minute rescue comes together.

“We need to have humanitarian aid whatever happens,” EU Economic Affairs Commissioner Pierre Moscovici said in an interview in Paris on Wednesday. “The Greeks didn’t turn their back to the euro zone. We must not turn our back to the Greeks.”

The EU has prepared scenarios on humanitarian aid and on easing Greece’s path out of the euro area, as well as continuing to work on a possible third bailout, European Commission President Jean-Claude Juncker told reporters in Brussels after Tuesday’s summit. Greece on Wednesday submitted a request for a new three-year bailout and has only days to win a green light from its creditors.

It’s too soon to discuss details of what the humanitarian-aid budget options would look like, commission spokeswoman Mina Andreeva told reporters Wednesday in Brussels.

In countries like Germany, where voters have balked at the prospect of a new round of rescue lending, humanitarian aid may be easier to sell to voters at home than a new bailout program.

“What we now have to do is to help the people there,” German Vice Chancellor Sigmar Gabriel said on a July 7 podcast. “As much as we may be annoyed with the Greek government, we can’t let people there suffer.”

Limiting Spillover

Shoring up Greece’s economy could help spillover in neighboring nations like Romania and Bulgaria, who don’t use the euro but are still hard hit by the Greek crisis.

“Many non-euro-member state countries have various levels of impact by the Greek crisis, most especially with banks being exposed to the Greek debt,” Maltese Prime Minister Joseph Muscat said in a Tuesday interview after the summit. “This is a crisis which concerns all of the EU.”

The European Central Bank is already set to extend a bank backstop facility to Bulgaria and is ready to assist other nations in the region to ward off contagion from Greece, according to people familiar with the situation.

The effect of humanitarian help for Greece may be more symbolic than anything else, said Daniel Gros, director for economy and finance at the Brussels-based Centre for European Policy Studies.

“This is mainly a political signal ’we will not leave you alone’, coupled with a certain feeling of superiority: ’without the euro you will become a basket case,’ ” Gros said.

Greek Accord 'Difficult But Possible': EU's Moscovici

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