Officials struggle with proposals for new Greek deal
Published 19/07/2011 | 05:00
EU government officials and commercial bankers struggled to reconcile competing proposals for a second bailout of Greece yesterday, just three days before a summit meeting called to prevent the crisis from spreading through the region.
French government spokeswoman Valerie Pecresse said she believed the summit of the eurozone's 17 national leaders scheduled for Thursday in Brussels would agree on a rescue of Greece, supplementing a €110bn bailout launched in May last year.
But it was unclear how a consensus could be reached on a way for private owners of Greek government bonds -- banks, insurers and other investors -- to contribute to the bailout by taking cuts in the face value of their holdings.
Imposing a small tax on banks is under active consideration as a possible alternative to more risky forms of private-sector involvement, a source said, confirming a German media report.
The source also said officials were considering measures to try to prevent the fallout from the Greek crisis from damaging financial markets globally.
Paul de Grauwe, a professor of international economics at Leuven University in Belgium, who has informally advised European Commission President Jose Manuel Barroso, said that national politicians had delayed taking decisive action on Greece for so long that their options were narrowing fast. "I'm afraid to hope. I still hope, yes, but I'm not optimistic," he said.
Officials are wrestling with a range of proposed schemes for Europe's bailout fund, the European Financial Stability Facility, to finance a voluntary buy-back or swap of Greek bonds, or possibly both. But all of the schemes could face technical and legal obstacles.