July 16, 2011
European leaders will convene on Thursday for an emergency summit on Greece, in a quest to resolve the festering debt crisis threatening ever more euro-zone countries.
The summit will aim to approve a plan for private-sector involvement in financing the Greece government, senior European officials said.
Such an agreement would resolve the last major stumbling block to a fresh bailout package for Athens, needed to prevent the country from defaulting on its roughly $500 billion of debt.
Euro-zone governments and the European Central Bank have been arguing for three months about whether banks and other bondholders should be made to share the burden of funding Greece, with the ECB and some national capitals arguing that imposing costs on private investors could wreck the market's confidence in many other euro countries.
But Germany, Europe's biggest economy, has insisted there can be no new money for Greece without private-sector involvement, and is now close to a deal that would impose Berlin's will on the euro zone. The ECB appears to have lost the support of national governments in recent days, as euro members have swung behind Germany's desire for bondholder participation.
"The question is how, not whether" there will be private-sector involvement, said a senior European official.
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