Financial Times
Editorial
May 9, 2011
There is one good thing to be said about last Friday’s meeting of the eurozone’s leading finance ministers and their Greek counterpart. For the first time since the sovereign debt crisis erupted they are preparing for action before being forced into a corner by events.
Markets’ continued lock-out of Athens has focused minds on the right question: what to do when Greece’s adjustment programme fails to produce the desired results. Athens and the eurozone must now show that they can also provide the right answer.
As leaders admit, the rescue programme looks set to miss its objective of returning Greece to debt markets for part of its 2012 sovereign financing needs. This opens a financing gap in the near future that affects markets in ways that are immediate and reach far beyond Greek sovereign debt. It is not a day too soon to lay a Plan B.
To do so means to do what European leaders have so far recoiled from: spell out what steps they will take if markets remain sceptical of commitments to prevent sovereign restructuring. A “revamp” of the loan programme that skirts this issue might well have to be revisited again soon, which would drain public patience further.
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