June 27, 2011
European leaders inched closer Monday to an agreement that could avoid a potentially catastrophic default by Greece on billions of dollars in debt, as France proposed a plan that could serve as a model for other European lenders to the teetering nation, where a general strike and widespread demonstrations were planned Tuesday ahead of a crucial austerity vote.
With investor pressure mounting ahead of the vote by the Greek Parliament this week, President Nicolas Sarkozy outlined a proposal under which French banks would give Athens more time to pay back loans as they come due over the next three years.
The banks would share part of the cost of the bailout by extending new loans to Athens as old loans mature, but the banks would not have to forgive the debt itself, a concern of many investors.
“We’ve been working on this with the banks and insurance companies,” Mr. Sarkozy said at a news conference in Paris. “We’re committed to going from a principle — the voluntary participation of the private sector — to concrete reality.” Mr. Sarkozy said he hoped that other European countries would adopt a similar plan.
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