Agreement in view of Greece before the EU summit
The leaders of the European Union should give the green light Thursday to a policy support mechanism to Greece combining bilateral loans from countries in the eurozone and the International Monetary Fund, diplomatic sources say on the eve of EU summit.
The objective of this mechanism is to ensure the stability of the euro, which hit a low of 10 months Wednesday after Fitch lowered by the credit rating long term Portugal, and he is not triggered so that Greece will manage to refinance themselves on the market, say these sources.
"We are not in view to publish a simple declaration in the policy or to take money out at once (…) What we seek is a clear political agreement, "said one European diplomat of high rank.
This strategy could be endorsed at a meeting of Heads of State and Government of the euro area, held before the summit opens, and then endorsed by all leaders of Twenty-Seven, even these sources suggest .
The discussion initiated on certain conditions imposed by Germany – a trip as a last resort and tighter European rules of budgetary control – could in turn be subject to further discussions at ministerial level.
The volume of aid is not clear at the summit, but highly placed sources within the European Commission reported that an envelope between 20 and 22 billion euros is planned, with participation of IMF could go up to 15 billion euros.
MATURITY
Diplomatic sources disclose that the next two meetings of the Eurogroup, in Madrid in mid-April in Brussels in mid-May, could be used to clarify these points if necessary.
"The art of the exercise is to give (George) Papandreou assistance requested while leaving, why not care for ministers to specify that possibly the next weeks," said one diplomatic source.
Chancellor Angela Merkel, facing the hostility of a majority of Germans and its coalition partners to any aid to Greece, faces May 9 to major elections in North Rhine-Westphalia .
For its part, Athens will refinance about 16 billion euros of debt between April 20 and May 23 and then hopes to qualify for a lower rate than that imposed upon the markets currently.
The German authorities, who suggested on Tuesday for the first time they could agree to provide aid to Greece to strict conditions, repeated that the issue was not on the official agenda of the summit and they not expect any decision Thursday or Friday.
For its part, Greece, which had threatened to appeal to the IMF if the Europeans brought him no clear support at the summit, now insists that a solution is found purely European.
"We are at a moment when Europe speaks for the future of the euro area (…) We insist that a solution must be found in a European framework because we believe that Europe can and must raise High colors, "said a spokesman for the Greek government.
THE EURO ZONE "not out of"
In Brussels, the European Commissioner for Economic and Monetary Affairs, Olli Rehn, has abounded in this direction and defended a mechanism based on the euro area.
He then called on leaders of Twenty-Seven to reach an agreement as early as Thursday, if necessary by bringing together the Eurogroup level of Heads of State and Government, because "the euro area is still not off the hook ".
Several European diplomats, the positions of France and Germany, two heavyweights of the single currency have converged in recent hours both on the IMF's participation in the mechanism, to which Nicolas Sarkozy is reluctant, as the organization of a summit of the eurozone, the idea does not appeal to Angela Merkel.
The lowering of the rating by Fitch of Portugal and that doubts about the Greek case led to a fall of more than 1% of the euro against the dollar at 1.3335 dollars, its lowest level since May 2009.(see)
The yield spread between Greek and German bonds (Bunds) to ten years has in turn strengthened slightly, to a level close to 330 basis points against 344 pdb Monday.
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