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EU ministers to map out Greek rescue plan

15. March 2010. | 09:33

Source: AFP

Detailed options for concrete European-level financial support to help Greece out of its debt crisis will be presented to eurozone finance ministers next week, sources said Friday.

Detailed options for concrete European-level financial support to help Greece out of its debt crisis will be presented to eurozone finance ministers next week, sources said Friday.

Alongside longer-term ideas to create a European Monetary Fund, "the idea is to get a result in terms of Europe's options for addressing the Greek problems if they ever get to that stage," one European source told AFP.

European leaders have promised they will come to Greece's aid "if necessary," but the detail of how eurozone or EU aid could be provided has to-date remained murky.

The European source said that officials have in fact "left no stone unturned" in examining available options, essentially confirming a report in French daily Le Monde on Friday.

According to the newspaper, a deal could be agreed in principle on Monday, with two plans of action on the table.

One involves a series of loans by European partner countries, coordinated by the European Commission, the EU's executive arm.

The other would involve the Commission borrowing money on markets and extending loans to Greece that would be guaranteed by EU states.

The loans would be at a lower interest rate than Greece is able to get at the moment because of the EU's status and higher credit rating.

According to an internal Commission document cited by Le Monde, the first is seen as easier in the short term, but the second is favoured in the long-run.

However, implementing the latter approach would require the assent of sceptics in Britain and Sweden because the Commission acts for all 27 EU member states, and not just the 16 that share the euro.

Given current and heated rows over financial supervision of the City of London, there could be a question mark over London's consent. AFP was unable to obtain a position from London on the question on Friday.

Le Monde put the value of the aid at between 20 billion and 25 billion euros (27.5 billion and 34.4 billion dollars).

"That's the (same) amount and the two options that have always come up in recent weeks" of discussions between senior officials, the source told AFP.

"As soon as governments say they will help Greece if necessary, technical work takes place on different means through which to provide that support," another diplomatic source said.

The head of the commission, Jose Manuel Barroso, said earlier this week that Brussels was ready to propose a "framework" for coordinated aid.

His spokeswoman Pia Ahrenkilde-Hansen told AFP on Friday: "We are ready to act if necessary.

"The technical work is underway but not over yet. The rest is speculation."

Greece is not about to go bankrupt, but faces new financing requirements in April and May -- with Athens pushing heavily for backing to reduce the interest rates it has to pay for borrowing.

"Everybody hopes that the aid measures, if they are agreed on Monday, will never have to be implemented," the source underlined.

A Greek report on progress towards reducing its deficit in 2010 by a target of four percentage points will be considered by the ministers first.

Following pressure from the so-called Eurogroup last month, Athens announced an additional 4.8 billion euros of cuts on March 3.

Another source said the reaction would likely be "peaceful" given the latest Greek action.

The finance ministers will also debate proposals to create a European Monetary Fund, which are backed by German Chancellor Angela Merkel.


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