January 9, 2012
France and Germany, the European Union’s key powers, insisted Monday that private creditors must take losses to help over-indebted Greece right its finances, but they also warned the Greek government that E.U. rescue funds will be held back unless it makes a deal soon with the increasingly nervous banks holding its debt.
The stern warning, after a meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel in Berlin, underlined the high stakes in faltering talks between the Greek leader, Prime Minister Lucas Papademos, and a coterie of banks and other financial institutions holding billions of dollars in Greek debt that the government acknowledges it cannot pay in whole.
Failure to reach a debt swap deal for Greece would most likely undo the rescue package concocted by E.U. governments late last year and dramatically undermine international confidence in the euro, the currency used by 17 of the 27 E.U. nations. If Greece or others among the 17 euro nations start to peel away, analysts have warned, the world economy could suffer a relapse and the entire E.U. project could be brought into doubt.
“We must see progress on the voluntary restructuring of Greek debt,” the Reuters news agency quoted Merkel as telling a joint news conference after the Berlin consultations. “The second Greek aid package . . . must be in place quickly. Otherwise, it will not be possible to pay out the next tranche [of the bailout] for Greece.”
More
No comments:
Post a Comment