EU has Plan B if Greece rejects

Reuters
June 29, 2011

European Union officials are working on a contingency plan for Greece if its parliament rejects an austerity program and the country cannot receive the next instalment of EU/IMF emergency loans, three euro zone sources said on Monday.

The sources said planning had been going on for several weeks and was designed to ensure Greece gets the liquidity needed to avoid default in the absence of the next, 12 billion euro tranche of its emergency loan package, due by mid-July.

As well as preventing default, the aim is to head off any contagion spreading from Greece to Ireland, Portugal and Spain, and the potential knock-on impact on Europe's banking system, with French and German banks large holders of Greek debt.

The plan is distinct from a French proposal for private sector involvement in a second Greek bailout program and is being discussed despite European Commission President Jose Manuel Barroso and other senior EU officials repeatedly saying that "there is no Plan B for Greece."

More