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Greek debt talks with banks to be finalised shortly

10 January 2012, 21:50 CET
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(BRUSSELS) - Negotiations between Greece and banks on a debt writedown will be wrapped up shortly, EU economic affairs chief Olli Rehn said on Tuesday.

"We are about to finalise shortly the negotiations on private sector involvement," Rehn said at an economic seminar at the European parliament, noting that a deal was a condition for a new bailout from eurozone governments.

Greece and banks have been negotiating a writedown of at least 50 percent in order to reduce the country's debt by 100 billion euros, a precondition for unlocking a second rescue agreed in principal at an EU summit last October.

Eurozone governments offered 130 billion euros ($169 billion) in direct aid, of which 30 billion euros will be used to recapitalise Greek banks to cover their losses resulting from the bond write-down.

"We work together with ECB (European Central Bank) and IMF in order to negotiate with the Greek government a second programme that will ensure sustainability of finances," Rehn said.

"We will reinforce economic growth in Greece," he added.

"It is not going to be easy. It is very challenging, but I am reasonably confident that we will achieve this aim and will thus continue to support the Greek people in order to overcome their current difficulties."

Greece is waiting for the second bailout after a 110-billion-euro EU-IMF rescue package in May 2010 failed to restore the country's finances.

Rehn said 2012 will mark a "turning point" for the eurozone.

"It will be the year when the future governance of the euro will be determined. And it will be the year when strong monetary union will finally be complemented by an ever closer economic union," he said.

"And there is a compelling reason for that. The crisis that has ravaged the European economy, and affected the jobs and welfare of millions of Europeans, is by no means behind us," he said.

Last December, 26 of the EU's 27 leaders agreed to enact a "new fiscal compact" aimed at deepening integration in the eurozone. Britain refused to back a new treaty after it failed to secure protections for London's vital financial services.

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Posted by Stoyan Antonov at 10 January 2012, 22:57 CET
EU is much poorer because of Greece bankruptcy- because it caused euro to devaluate every european (non greek) lost some of our savings, and in the opposite - us dollar is on the rise, and the jobless rate there improved; in contrary - recent writedowns of greek debt caused those banks involved to be downgraded, and as a consequence major EU companies shrank their operations and thousands of people lost their jobs- and here china is making use of it. Greek bankruptcy has vandalising effect on EU, it is like a nuclear bomb