HomeWorld BusinessEU leaders hope for Greece bailout deal

EU leaders hope for Greece bailout deal


ROME — Italian Prime Minister Mario Monti, German Chancellor Angela Merkel and Greek Prime Minister Lucas Papademos are hopeful that an agreement can be reached on Greece at Monday’s Eurogroup meeting, Monti’s office said.

The three leaders expressed shared optimism over a Greek deal during a conference call on Friday, a statement said.

Merkel was to have travelled to Rome on Friday to hold talks with Monti, but cancelled the visit over the sudden resignation of German President Christian Wulff.

Athens set out extra austerity measures on Thursday it hopes will clinch a €130bn ($170bn) bailout, which will save it from bankruptcy next month, at a meeting of finance ministers from the 17-nation eurozone on Monday.

But negotiations with lenders in the European Union and International Monetary Fund (IMF) are again going down to the wire, straining ties between Greece and northern members of the currency bloc.

“The scepticism is especially strong among the AAA states over whether Greece will be able to make it,” Germany’s Der Spiegel magazine quoted Austrian Finance Minister Maria Fekter as saying of countries with top-notch credit ratings such as Germany, Finland and the Netherlands.

“The risk of a Greek insolvency is not off the table.”
Uncertainty focused on an assessment by the European Commission, the European Central Bank and the IMF predicting Greek debt will be around 129% of gross domestic product in 2020, well above a target of 120% set in October.

Officials have previously said a target of 125% would be acceptable to most eurozone members, but further measures will be required to meet even that goal.

Faced with the prospect of a change in the Greek government in April, the eurozone is also seeking greater oversight of the measures Greece is taking to cut its debt, and for the creation of an escrow account to ringfence funds for debt repayment.

Even if Greece secures its second bailout since 2010, officials say there is a growing body of opinion within the eurozone that a new bailout may not solve its problems.

“Honestly speaking, we are thinking about emergency planning if something unexpectedly goes wrong,” Dutch Finance Minister Jan Kees de Jager told the Dutch parliament on Thursday.

“It is prudent policy of every finance minister to think about what can happen in addition to the desired path.”

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