ECONOMY

Greece faces ECB cliffhanger

greece-faces-ecb-cliffhanger

European finance ministers encountered a range of hurdles to financing Greece through the next few weeks during negotiations over another full-scale bailout.

All the available options are either financially inadequate, politically unpalatable, legally suspect or beyond European leaders’ control, finance ministers said.

With Greece due to pay the European Central Bank 3.5 billion euros ($3.9 billion) on Monday, ministers are looking at whether they could recycle interest payments already made by Greece to eurozone central banks, tap a fund managed by all 28 European Union governments, give Greece more time to pay, or organize bilateral loans from individual EU governments.

“We are looking at all the instruments and funds that we could use and all of them seem to have disadvantages or impossibilities or legal objections,” Dutch Finance Minister Jeroen Dijsselbloem, chairman of the group of euro ministers, told reporters on Tuesday in Brussels.

Beyond the July 20 ECB deadline, Greece has to make 600 million euros of interest payments in August and also owes $1.7 billion in arrears to the International Monetary Fund.

European leaders promised on this week to build the financing bridge for the time it takes to negotiate a third full aid package for Greece, worth up to 86 billion euros.

“Never underestimate the capacity of European lawyers and economists to come up with a solution,” Finnish Finance Minister Alexander Stubb said. “It would be impossible to back down at this stage.” He said as many as six options are on the table.

No single option will be enough, Austrian Finance Minister Hans Joerg Schelling said. He told reporters in Vienna on Tuesday that “a mix of different alternatives” will be found.

Euro-area ministers will discuss Greece’s short-term financing on a conference call later Tuesday or Wednesday.

[Bloomberg]