Euro-area finance chiefs are scheduled to talk three times in the next two weeks as the 17-nation bloc grapples over ways to fill Greece’s financing gap and ease concerns that it might have to exit from the euro.
Ministers will probably hold a “physical meeting” on November 8, Luxembourg’s Jean-Claude Juncker, who leads of group of euro-region finance ministers, said in an interview in Luxembourg on Monday. The gathering will take place between a Greece-related conference call set for October 31 and a regularly scheduled November 12 meeting in Brussels.
The negotiations reflect policy makers’ struggle to find a solution for Greece, which remains the epicenter of Europe’s sovereign debt crisis more than three years after it owned up to an inflated budget deficit. International Monetary Fund chief Christine Lagarde is due in Berlin on Tuesday for talks with German Chancellor Angela Merkel after meeting in Paris on Monday with French President Francois Hollande.
“There is no consensus right now,” said Carsten Brzeski, a senior economist at ING Group in Brussels. “I still think that some kind of debt forgiveness will happen in the future but I don’t see it happening right now.”
Now facing a fifth year of recession, Greek leaders are trying to agree on labor reforms and other structural changes in a bid to qualify for a next tranche of aid under a 130 billion-euro rescue.
Merkel’s government, as the biggest country contributor to Greece’s two bailouts, signalled on Monday that it is willing to consider a European Central Bank proposal for a buyback of Greek debt. Finance Minister Wolfgang Schaeuble, who cast doubt on the proposal earlier this month, said yesterday that a buyback “is worth serious discussion.”
At the same time, German officials said Greece shouldn’t expect other euro-area nations to renegotiate the loans they’ve already given the country. A restructuring of Greek sovereign debt held by its public sector partners “is out of the question” for Germany and “not in Greece’s interests,” Steffen Seibert, Merkel’s chief spokesman, told reporters in Berlin on Monday.
European policy makers are preparing their opening gambits on Greece as the so-called troika of the European Commission, the ECB and the International Monetary Fund compiles its report on progress made by Prime Minister Antonis Samaras’s government in meeting targets that are a prerequisite for Greece’s next aid installment.
German news magazine Der Spiegel reported in this week’s edition that the troika proposes a debt restructuring for Greece that would require public-sector lenders to take heavy losses. Greece already carried out the biggest write-off of privately held debt in history. An interim troika report was distributed to the German government last week, Schaeuble said yesterday in a radio interview.
Juncker said there won’t be any decisions taken during the October 31 conference call, and that decisions are unlikely at the November 8 meeting. He tried to quash speculation that Greece might be forced out of the eurozone if its woes continue.
“The talk about an exit of Greece from the eurozone has to stop,” he said separately in a speech on Monday.
Merkel, the key political player during the crisis, said in August when Samaras visited Berlin that she was “deeply convinced” his government would “do what it takes to solve the problem in Greece.” She said her intention was to help Greece reach “the light at the end of the tunnel.”
Merkel and Lagarde are due to brief reporters in Berlin at about 6:30 p.m. on Tuesday together with the heads of the World Bank, the Organization for Economic Cooperation and Development, the World Trade Organization and the International Labor Organization.