On Monday the Greek recovery will capture the Eurogroup´s attention for the umpteenth time. European leaders are considering adding 85 billion euros to Greece?s recovery plan, extending it to 2014. The original plan was proposed to take effect from 2010-2012 and cost 110 billion euros. Prior to today´s meeting the European Commission´s objective was to piece together an agreement that clarifies outlines of the recovery boost and doubts about whether Greece and other at-risk countries (Portugal, Ireland, Spain, Italy and Belgium) might go bankrupt.
Brussels is suggesting that technical details and fringe issues will keep the decision-makers tied up for several weeks more.
"We are hoping for a clear resolution this Monday," assured one of the negotiators on Friday. "It will keep us busy. There is time," he added. "There are no plans for extraordinary advances, but we are preparing now so that things will go well after vacations," another negotiator added.
Germany and France, the two most influential countries decision-making process, have already assured that there will be no decisions made until December. Greece will not fail this summer because its European neighbors and the International Monetary Fund (IMF) are lending them 12 billion euros in July, which totals to 110 billion euros of aid from 2010-2012.
Various banks, insurance companies and investment funds in Germany, the Netherlands and Finland are making demands about their participation in the Greek recovery, and this presents the main stumbling block for the recent recovery boost. There are three countries managed by coalition governments, whose national political screw-ups are weighing down consensus in the EU.
So that the private sector can offer a lifeline to Greece, Germany proposes that shareholders of Greek public loans that expire between now and 2014 agree to exchange them for bonds that expire seven years later. France is proposing that banks, insurance companies and investment funds should not extend the redemption period of their deals, but take the following strategy: redeem at least 30% of their investments in Greece; reinvest 50% in new 30-year Greek bonds at interest rates between 5.5% and 11%; and designate the final 20% to investing in high-value debt to hedge possible losses in the other riskier investments.
Translated and Edited in English by Brandon Dyches and Jose L. De Haro
