EU leaders inch toward deal for Greece and euro
European Union leaders edged late Wednesday toward a plan to bolster the euro and help Greece overcome its debt problems but it appeared that they would not finalize proposals on a range of issues, including the size of haircut for Greek bondholders.
The Greek government had been hoping that the meeting of all 27 EU leaders, followed by talks between those representing just the 17 countries in the eurozone, would culminate in an agreement on the exact size of the writedowns for holders of Greek debt, the recapitalization of European banks and the steps to strengthen the European Financial Stability Facility.
Speaking on his way into the talks, Prime Minister George Papandreou said: ?Now is the time for the European leadership collectively to take decisions to end the uncertainty, end the crisis, turn the page and make sure we make a big step forward for the better future and prosperity and security for our peoples in Europe.?
However, by late last night it appeared that the talks would deliver an incomplete set of proposals. According to a draft statement obtained by Reuters before the conclusion of the meeting, the eurozone aims to leverage its 440-billion-euro bailout fund ?several fold? but finance ministers will only agree on the details of how that will be done in November.
In relation to Greece, the document said that the European Commission was to strengthen its monitoring of the troubled country and that Greek banks would be provided with adequate support to recapitalize and cope with losses from any haircut.
Speaking in the German Parliament before the meeting, Chancellor Angela Merkel said that ?permanent surveillance? of Greece?s budget would be ?desirable.? At the moment, Athens is monitored every three months by inspectors from the Commission, European Central Bank and International Monetary Fund.
?We must certainly accompany Greece for quite some time to come,? said Merkel.
Reports before Wednesday?s meeting ended suggested that the size of the haircut would be at least 50 percent, and that Merkel and French President Nicolas Sarkozy would personally negotiate with banking representatives to convince the investors to accept the reduction voluntarily.
The EU leaders were expected to say in their statement that Greece is ?an exceptional and unique case? requiring private sector involvement in a bid to nip in the bud any speculation about other eurozone countries also having their debt reduced.
