Brussels - The eurozone intends Monday to draw a line under the
contentious second Greek bailout with a deal which they hope will also
quell suggestions Athens could be pushed out of the currency area.
After several false starts during weeks of what
officials said was "deliberate pressure" to get the ruling class in
Athens to change its economic mindset, a strong political and financial
signal is now anticipated when the Eurogroup of finance ministers meet
in Brussels.
This after Greece enacted fresh spending cuts despite violent protests.
Party leaders seeking power in a general election set
for April committed separately to carrying through radical reforms, as
hardliners floated a willingness to cut the country adrift.
The Italian government -- until recently, most at risk
of financial-market contagion given a massive debt burden there -- said
on Friday that German Chancellor Angela Merkel, Italy's Prime Minister
Mario Monti and Greek counterpart Lucas Papademos were "confident that a
deal can be reached on Greece at the Eurogroup," after telephone talks.
As one negotiator told AFP: "The Greek government might
not get everything it wants going forward, but if it tries really hard,
it will now get what it needs."
Perhaps significantly, China's leader-in-waiting Xi
Jinping told the Irish Times, ahead of a visit to Ireland Monday, that
he believes the economic problems facing the European Union, Beijing's
biggest trading partner, "are temporary."
Arguments about how far the eurozone can dictate
day-to-day decision-making in sovereign Greece still have a way to run,
although former European Central Bank (ECB) deputy Papademos has already
waved the white flag on external surveillance.
Work on the figures will keep officials busy right up
until the 3.30 pm (1430 GMT) start of the Eurogroup meeting in Brussels,
with 11th-hour discussions to iron out details on Sunday.
There are still issues to resolve before a deal can be
announced that will free the eurozone to park the Greek problem to one
side, and return the focus to constructing a financial firewall for the
currency as a whole at a March 2 euro summit.
These involve the functioning of an "escrow" account,
which would ring-fence monies due to be repaid to eurozone governmental
partners, while leaving just enough "incentive," as one source said, to
encourage Greek taxation reform and privatisations.
There is also a 5.5-billion-euro hole in the sums, as one senior official revealed to AFP last week.
Ideas being worked on here include lowering the
interest on past eurozone loans to Greece, and involving national
central banks -- and by extension the European Central Bank itself -- in
an exchange of old Greek bonds that had already lost market value for
new IOUs.
Germany and the Netherlands still need to get the
second bailout past sceptical parliaments, though, so the numbers must
remain close to what was originally agreed in October.
Back then, leaders sketched out a €230bn revamp of a still-unfinished €110bn May 2010 rescue package (a
little over $300bn at today's exchange rates).
The first 100 billion of the extra funding was to come
from a write-down of debt held by private investors, with another 30
billion euros to refloat Greek banks brought to their knees in that
process.
On Monday, the ministers seem certain to sanction
legally-binding offers for the relevant bondholders, possibly trimming
the so-called Greek bank "sweeteners" but also committing European
Financial Stability Facility (EFSF) resources to underwrite the offer
period.
The first bailout proved insufficient for a country
still carrying €350bn in debts, while struggling through a
fifth year in recession with social tensions frequently boiling over.
The crunch has come because Greece faces a bond repayments bill of €14.5bn on March 20.
The rest of the eurozone, though, is not handing over
money with no strings attached -- it's more like putting Athens on the
aid equivalent of a hospital drip, with a small army of EU officials
heading to Athens to make sure Greece delivers on its promises too.
Further law changes may be sought while the banks mull
the terms of the debt write-down underpinning the bailout, to cover
alternatives were the offer to flop.
The bottom line is that EU partners see Greece as the
victim of chronic financial mismanagement by dynastic political forces
-- what Monti last week called a "perfect catalogue" of errors.