ALL eyes are on Luxembourg this morning as the Eurogroup meets for a second day of crucial talks to thrash out another bailout for Greece, which needs an estimated €90-€120bn (£80-£97bn) to avoid a bankruptcy that would bring down the euro.
As Eurozone ministers threatened to withhold half of the next €12bn tranche of Athens’ aid, which the sovereign needs to see it through July, protestors continue to occupy the streets in opposition to the austerity measures that parliament must pass to qualify for the money.
There was some optimism after German Chancellor Angela Merkel and French president Nicolas Sarkozy staged a show of unity on Friday, confirming that the Eurozone’s paymaster states are ready to inject the necessary aid to avoid a Greek default.
Merkel also gave way on a key issue, saying that a mild voluntary rollover of private-sector debt would be enough to satisfy Berlin’s demand for burden-sharing.
But the terms of any new bailout are still proving difficult to agree, with the ECB against any form of burden-sharing.
Ministers have not even agreed what form the new bailout should take. Initial suggestions that Eurozone states and the IMF would simply extend the €110bn of bilateral loans they made for the first bailout have given way to discussions about using the European Financial Stability Mechanism (EFSM), which the UK guarantees to the tune of 13.5 per cent.
The aid is also dependent upon Greece voting through another batch of austerity measures, including a €50bn privatisation scheme. A recent poll shows that Greeks are sharply divided over the austerity measures, with 47 per cent against and 35 per cent in favour.
Yesterday Mayor of London Boris Johnson said Greece should be allowed to go bankrupt and should withdraw from the euro.