May 9, 2011
Europe's debt crisis has returned full circle to the problem that started it over a year ago: How to save the malfunctioning Greek state from running out of money.
Greece has been slipping farther behind its targets for cutting its budget deficit and is expected to need nearly €30 billion ($43 billion) of extra financing for 2012, according to euro-zone officials.
The country's growing reliance on aid from other euro members is fueling a debate over whether Greece should hold talks with its private creditors about extending the maturity of its bonds, a step that Germany is quietly pushing but other euro nations are resisting.
Euro-zone finance ministers meeting in Brussels early next week are expected to debate Greece's debt burden, its need for additional aid, and its request for more time to meet its fiscal targets. Agreement on the increasingly thorny issues surrounding Greece's crisis could take months to reach, participants in the talks warn.
European governments are coming to accept that Greece will be a ward of its euro-zone peers for years to come. That prospect is politically painful to swallow, especially in Germany, where opposition to aiding Greece is mounting in parliament and among voters.
The alternative, however, is a messy debt default by Greece that could trigger a major international banking crisis, senior European policy makers say, comparable to the turmoil that followed the failure of Lehman Brothers in 2008.
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