Greek debt talks
February 20, 2012
Finance ministers of eurozone countries are meeting in Brussels to discuss the way forward for Greece. The focus will be on whether to approve a second rescue package worth 130 billion euros ($171 billion).
The head of the Eurogroup, Luxembourg's Prime Minister Jean-Claude Juncker, has expressed confidence that the body will reach agreement on essential features of the rescue package. Rome shared the view in a conference call between Italian Prime Minister Mario Monti, Greek Prime Minister Lucas Papademos and German Chancellor Angela Merkel.
On her official website Saturday, Merkel tried to put a positive spin on other European countries' disagreements over Greece. She compared European politics to German domestic politics, saying both see strong arguments over the right way forward. But she added that even when debating, eurozone leaders do so with the best intentions toward Europe.
Internal dispute
The question whether Greece can be saved is fuelling debate across Europe. German Finance Minister Wolfgang Schäuble recently raised his own doubts on the subject, saying eurozone countries could not pour their aid into a "bottomless pit."
On Friday, Merkel's spokesman, Steffen Seibert, made a point of saying the chancellor and Schäuble were on the same page regarding Greece.
French Prime Minister Francois Fillon has warned against speculation that Greece could go bankrupt.
"That would be dramatic for Greeks themselves and dramatic for Europeans," he said, adding that everything possible must be done to prevent Greek insolvency.
Greek efforts
The Greek government held a special cabinet meeting on Saturday to discuss possible obstacles to a second aid package. One issue is how to cut an extra 325 million euros from its 2012 budget. That's the amount by which Greece still falls short of the 3.3 billion euros in cuts the eurozone is demanding before the group will authorize further aid. The remaining millions are expected to come from cuts in state pensions.
The fear of going bankrupt, and the possible consequences, seems to outweigh the political considerations of Greek leaders for the moment. According to an analysis of the so-called troika of the European Commission, the International Monetary Fund (IMF) and the European Central Bank (ECB), the Greek savings plans proposed to date are not enough to lower Greece's debt level over the long term.
It is also unclear whether Greece's private creditors will voluntarily trim Greece's debt by 100 billion euros. The IMF, which represents private financial institutions, has yet to officially give its opinion.
The ECB is afraid that if Greece's creditors do not voluntarily forgive the country its debts, the Greek government could pass a law to convert its debt. With a compromise, the ECB would protect itself against billions in losses.
Author: Rachel Gessat / srs
Editor: Andreas Illmer