Euro zone finance ministers will clear the release of a €12 billion rescue loan to Greece later today, but they are struggling to resolve slippery questions over a second international bailout for the country.
The ministers unexpectedly changed plans yesterday for their latest round of talks on Greece. Instead of travelling to Brussels for an emergency meeting tomorrow, they are now reviewing the situation in a teleconference this evening.
Minister for Finance Michael Noonan is among those taking part.
Still in doubt is the attitude of the European Central Bank towards a nascent initiative to enlist voluntary private creditor involvement in the second bailout. Further uncertainty surrounds the attitude of credit rating agencies, whose support is crucial if the initiative is to avert any ruling that the effort has resulted in any default on Greek debt.
Officials are also trying to develop a proposal to appease Finnish demands on Greece to provide collateral for loans under its second bailout.
European officials said this demand was proving especially difficult to resolve, particularly in light of the political tension in Greece.
The teleconference follows the Greek parliament’s endorsement of a new austerity and privatisation programme in two votes this week. Euro zone officials remain concerned, however, that the authorities in Athens will run into yet more trouble when they seek to implement the laws.
The votes took some of the urgency out of the Greek situation, freeing the ministers to adopt a formal decision today to release the €12 billion. “I’m certain we now have a sufficient consensus that we can take a decision during the weekend,” EU economics commissioner Olli Rehn said yesterday on Bloomberg Television.
The ministers had withheld payment of the loans until MPs backed the plan, threatening a sovereign default this month as the Greek authorities run out of hard cash and fuelling pressure on fellow bailout recipients Ireland and Portugal. “We have now contained the crisis to the three more vulnerable countries,” Mr Rehn said.
Although the ministers had also hoped to advance proposals for a second Greek bailout at their Sunday meeting, lingering uncertainty over core elements of the plan led them to postpone the face-to-face talks. They are due in Brussels again on Monday week for two days of scheduled talks, at which they hope to sign off on the second rescue.
There were signals earlier this week that the proposed Sunday meeting – which was due to begin at 5pm – would continue late into the night as ministers sought to settle on core elements of the second plan if not the final deal.
In an indication that the hopes for the teleconference are more modest, a European official indicated yesterday it was likely to be a much shorter affair.
This reflects the fact the ECB’s stance on creditor participation remains far from clear. The bank opposed moves to compulsorily impose bailout costs on private investors, saying any such initiative should be purely voluntary. This led a long stand-off with Germany.
Although Berlin relented, euro zone officials are still discussing a variety of proposals under which investors would voluntarily give Greece some breathing space.
