Eurozone crisis: Approval sought for new Greek bailout

Published on Monday 20 February 2012 14:23

EUROZONE ministers will try to overcome differences of opinions on Greece today as they seek to approve a new bailout to help the country avoid looming bankruptcy.

The 130 billion euro (£110 billion) lifeline has been held up by disputes over a series of last-minute conditions attached to the support.

As well as a long-agreed austerity package of severe pay, pensions and jobs cuts, the Greek government has been told to find 325 million euros (£270 million) of immediate savings in this year’s budget.

It has also been ordered to deliver a written pledge signed by key political parties that the austerity measures will be honoured even if there is a change of government in forthcoming elections.

The new savings have been found, says Athens, but failure to produce cross-party assurances on the austerity package forced the cancellation of emergency talks in Brussels last week, and triggered open discussion about the prospect of letting Greece default and leave the euro.

Behind-the-scenes talks have been going on over the weekend about the chances of Greece - which has already received a 110bn euros (£91bn) bailout - being able to slash its debt and deficits as required even with a second financial package, and even agreement from private bondholders for a substantial share of the debts they are owed by Athens.

European Commission officials in Brussels insist the aim is to keep Greece in the euro, with hopes rising of a final bailout deal, without which Greece will not be able to meet its next debt payments on March 20.

Even German Chancellor Angela Merkel, whose country will face the lion’s share of new bailout pledges to Greece, has dismissed deep splits within her government to voice confidence that a deal can be done.

If Greece did decide to quit the eurozone, it would not be a “straightforward” solution, Foreign Secretary William Hague warned.

He told BBC television’s Andrew Marr show yesterday that the Greek government would have to be ready to restore border controls if necessary to stop the flight of euros from the country.

“It’s not straightforward to leave the euro. It was built without exits” said Mr Hague.

“They (the Greeks) don’t have the old currency sitting in the vaults ready to distribute.”

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