Assembling the pieces for a Greek resolution

Financial Times
February 6, 2012

The concept of setting up a special escrow account for Greece, where resources from the country’s €130bn rescue fund would be used first to service the country’s debt before being handed over to Athens, would tie the hands of the Greek government without imposing Germany’s controversial plan for an external “budget commissioner”.

The German proposal, shot down in flames at the last EU summit, included a requirement that debt-servicing be given top priority for the Greek rescue funds, along similar lines already introduced by the Spanish government.

The latest proposal, coming from both France and Germany, may help to placate officials in European capitals who are looking for more supranational control over Greece’s budget and reform efforts. The escrow account could be run by the International Monetary Fund or by the Fund in conjunction with the EU.

However, ithe scheme will not necessarily persuade Eurozone leaders to come up with the additional to pull Greece back from the brink of default yet again.

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