Pressure mounts to seal €100bn Greek debt deal

FINANCE MEETING: LAST NIGHT’S talks in Brussels took place amid mounting pressure on Greece and its private creditors to seal…

FINANCE MEETING:LAST NIGHT'S talks in Brussels took place amid mounting pressure on Greece and its private creditors to seal a deal quickly to cut its national debt by some €100 billion.

After talks in Athens broke down at the weekend, some of the most powerful figures in the euro zone aligned in Brussels yesterday to demand a speedy breakthrough.

Euro zone finance ministers were briefed on the talks by Greek minister Evangelos Venizelos, who himself came under pressure over the country’s backsliding on promised reforms.

This is crucial given the heavy conditionality which will attach to the second European Union-International Monetary Fund rescue plan for Greece, which will be worth about €130 billion to the country.

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German finance minister Wolfgang Schäuble said any deal with private creditors must help Greece cut its debt pile to “not much more than 120 per cent of GDP” by 2020.

In the eyes of the country’s bondholders, however, a cut of that magnitude may not be feasible on a voluntary basis.

The Institute of International Finance, a lobby group which is acting for the creditors, has been arguing it has no scope to secure better terms than those in the offer at the centre of the current impasse.

Institute of International Finance chief Charles Dallara said on Greek TV on Sunday the outcome was in the hands of the political authorities to choose a path between a deal with voluntary private sector involvement or an uncontrolled sovereign default.

Although Europe’s rescue strategy in the euro zone is designed to avoid any default, the Dutch finance minister upped the stakes by saying his government never insisted bondholder losses must be voluntary.

“We have never opposed a credit event or doing it in another way than purely voluntary,” said Jan Kees de Jager. “For us it has never been an absolute condition to have it done voluntarily. We hope that the banks contribute voluntarily.”

In the hours before the talks began, Mr Schäuble made it clear the EU authorities are still insisting on a big bondholder contribution before advancing talks on a second international bailout to the country.

“The negotiations will be difficult, but we want the second programme for Greece to be implemented in March so that the second [rescue] tranche can be released,” the German minister said after talks in Paris with his French counterpart Francois Baroin.

This was a reference to a €14 billion bond redemption due in mid-March which Greece will not be able to make without additional aid from its EU-IMF sponsors, itself conditional on an agreement with its creditors.

“Greece must fulfil its commitments. It is difficult and there is already a lot of delay,” said Mr Schäuble.

In spite of the tough rhetoric from opposing sides in the Greek talks, EU economics commissioner Olli Rehn expressed confidence the negotiation could be wrapped up within days.