The European Investment Bank (EIB) will loan to Greek enterprises only after signing a "return of the drachma" clause. This has become clear after the Greek Public Power Corporation DEI began at the beginning of the month negotiations with the European financial institution for an investment loan. It required the loan agreement to contain a paragraph describing the actions in case Greece leaves (or is excluded) from the euro area. Furthermore, the European Investment Bank insisted that the loan should not be under the Greek law, but under the British law, which protects more the interests of creditors in case of default. The loan to DEI is to the amount of 70 million euro and it will be used to finance the construction of a natural gas distribution plant in Megaloupolis.
The information disclosed so far indicates that the European Investment Bank will introduce a similar action clause in the loan agreements for all countries applying a recovery programme similar to the Greek one. This means that the institution does not have much faith in the ability of Greece, Portugal and Ireland to recover from the debt crisis. Other analysts believe that the European Investment Bank does not generally believe in the survival of the euro area because, according to unofficial information, the "national currency" clause will be introduced for all European Union countries. The third version is that the European Investment Bank wants to preserve its high credit rating and it is taking preventive measures in case the debt crisis is not resolved.
The European Investment Bank has committed to give Greek enterprises loans of up to 600 million euro by January next year. In 2013, credit lines to the amount of 400 million euro will be open for Greece and as much could be loaned in 2014. The European Investment Bank is likely to grant 1.4 billion euro in total by 2015. All of these loans, however, will contain the "drachma" clause and will be subject to the British law to ensure the return of granted funds in case of a political failure that will lead to an economic collapse and exit from the euro area.
Greek banks currently are availing 440 million euro from the European Investment Bank, which still cannot be put into the real economy. One of the three main reasons why ready money cannot be used by Greece is the low credit rating of the country (selective default). It cannot be raised before the debt haircut process PSI is completed and the bank cannot grant the money before the credit rating is improved. Second is the problem with the recapitalization of the local financial system. It is unable to operate under the market rules because its capitalization is reduced now as a result of the PSI and interest rates on local loans are unrealistically high.
Last but not least remains the delay in the formation of the guarantee fund, which will allow the European Investment Bank to allocate the funds. The Bank is involved in the establishment of a mechanism that will serve to support the real economy of Greece. The guarantee fund will be supported by unspent European Union funds of the National Strategic Development Framework (ESPA). It will not directly grant funds but will provide guarantees to banks willing to take advantage of the low-interest loans from the European Investment Bank. The guarantee fund will avail 1.5 billion euro at first, which can trigger resources to the amount of 2.25 billion euro from the European Investment Bank and the local financial system. Initially, the fund will finance large projects in waste management and infrastructure projects. Later, it is likely to support small business projects as well. However, not a dime of that money can be granted for the salvation of Greece until the fund is put into operation.