Tough talking confronts Euro finance ministers

(BRUSSELS) - Quick fixes if holes in Greece's budget need filled, longer-term options enabling countries that share the euro to be rescued and battles over hedge fund and private equity regulation or VAT.

The issues confronting eurozone and European Union finance ministers at their monthly gathering in Brussels on Monday and Tuesday are as many and as varied as they are contentious -- you'd think we were still in recession.

Formally, no one will be talking about mechanisms that will allow France, Germany and others to loan money to Greece, or a plan for the European Commission to borrow money on intenational markets for the same purpose.

"It's not on the agenda," says the top representative of the EU's Spanish presidency, with a smile as long as a siesta. The same goes for the big talking point going forward, the creation of a so-called European Monetary Fund.

Another European diplomat smiles equally roundly when admitting there will be "no debate" on items that are on the formal agenda for these talks, which are also about preparing the ground for this month's full summit of EU leaders.

How the world's biggest trading bloc, home to half a billion people, positions its economy over the next decade in a bid to keep pace with emerging giants around the world from China through India to Brazil, is one of these.

Growth may be as fractional as the experts tell you it is fragile, but new positions on exit strategies -- or when to leave banks standing on their own two feet, and when to raise interest rates -- will also be rubber-stamped.

A commission-inspired drive to keep the battle to control climate change on the international agenda, with agreement on how to finance the fight, must also compete for attention with EU budget priorities for next year on the list.

That's without mentioning a vigorous attack on Credit Default Swaps -- the lucrative trade in complicated insurance against slices of debt default risk -- spearheaded by France, Germany, Greece and Luxembourg, with US approval.

"Imagine I take out insurance in case you die," said a French diplomat, neatly illustrating Athens anger against high-end speculators. "Then imagine I sell bits of it to manipulators who might want something bad to happen to you."

With the talk in the corridors mainly about how to deliver the concrete assistance Greece was promised last month by the EU's other 26 national leaders "if necessary," political expediency requires deals done where possible.

To that end, a row over new legislation making it harder for non-EU hedge funds and their like to sell to the 440 million people outside Britain, the management hub for Europe's finance industry, is presented largely as tactical.

London is angry that its managers, with funds mostly housed in tax-haven dependencies like the Cayman Islands or Guernsey, will not be given a "passport" to sell products the rest of Europe sees as systemically risky.

Paris, on the other hand, complains that G20 recommendations on curbing bankers' bonuses will not be applied to hedge fund managers under compromise legislation expected to be rammed through, with non-euro Britain "isolated."

Locked in a fight to the finish for a first stab at power with the conservative opposition, Gordon Brown's pre-election government may have negotiated an important opt-out within new laws for financial supervision.

But despite a nine-month battle, backed by the US Treasury chief, it admits it has lost the argument over alternative investment funds and fully expects to be voted out of the room on Tuesday for the meeting's signature agreement.

Which would only accentuate the split between the eurozone, troubled by new, cross-border challenges and priorities including direct relations with global bodies, and those who have yet to embrace the euro or meet entry criteria.

And which also brings us back, given EU legalities, to fundamental problems at the nub of the EMF debate, or indeed to potential obstacles to plans for the commission, an expression of the 27, to borrow on Greece's behalf.

A busy couple of days in prospect.

Economic & Financial Affairs Council