June 15, 2011
Euro-area finance chiefs struggling to break a deadlock on how to enroll investors in a second Greek rescue without triggering a default said they may need more time to reach a deal.
An emergency session of finance ministers in Brussels late yesterday failed to reconcile a German-led push for bondholders to shoulder part of the cost of a new Greek aid package with European Central Bank warnings backed by France that the move might constitute the euro area’s first sovereign default.
With consensus elusive before the target date of a leaders’ summit late next week, finance ministers agreed to convene again on June 19, a day earlier than planned. Talks may drag on into July, Luxembourg’s Finance Minister Luc Frieden said.
“There’s no plan B, we have to come up with a solution,” said Gilles Moec, co-chief European economist at Deutsche Bank AG. “They’ll find a way to make it safe, which is what the ECB and French want, and make it irrevocable and grant more time, which is what Germany wants.”
The focus now shifts to German Chancellor Angela Merkel and French President Nicolas Sarkozy to resolve their differences at a June 17 meeting in Berlin. Pressure on euro-area governments to craft a rescue plan intensified this week after Standard & Poor’s slapped Greece with the world’s lowest credit rating.
“We have to proceed very cautiously,” Frieden told reporters after yesterday’s emergency session, adding that “very clearly we have to go in the direction” of a delay until next month. “Several options -- from the IMF, as well as from the European Central Bank and from the European Commission -- still have to be studied.”
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