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Greece agreement 'by the end of the week'

Date: Tuesday 31 Jan 2012

Greece agreement 'by the end of the week'

“Close” has suddenly become “by the end of the week”, at least according to the new definition offered by European political leaders with regard to that “imminent” agreement between Greece and its private bondholders.

That’s the new promised timeline for this deal - one that’s been in the works since last July - to be reached according to the EU president Herman Van Rompuy. Greek Prime Minister Lucas Papademos appears to be on the same page. Although Papademos pointed out that there had been “some difficulties” in the talks, he was confident of reaching a final deal.

“The timeline is tight, but we’re absolutely focused on our goal to bring the negotiations to a successful conclusion by the end of the week,” he said.

Greece is under pressure to get the deal with its private investors pushed through in order to receive a second €130bn aid package from the IMF, ECB and the EU.

Athens faces an upcoming €14.5bn bond payment on March 20th, but it will need to have an agreement in place before then, as the paperwork takes at least six weeks. In this context, the European Council stated last night that it hopes to have the terms of PSI (private sector involvement) by mid-February.

Yet not all European leaders are pleased with Greece’s failed efforts to get its fiscal house in order with German Chancellor Angela Merkel shaking her finger at Athens yet again.

In declarations made last night, Merkel stated that “the sustainability of Greece’s debt is especially bad. There needs to be a way found via more action by the Greek government and, for example, by more contributions on the part of private creditors in order to close the gap.”

But so far, European leaders seem to lack the gumption to force a full-fledged takeover of the country’s finances. Eurogroup President Jean-Claude Juncker told German radio that there wasn’t a need to appoint a European “budget commissioner” that would watch over Greek fiscal policy and have veto power over Athen’s decisions.

Last week, market reports pointed to calls by German officials for just such a supervisor, though the Chancellor’s office was quick to deny the rumours.

JM

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