Q. WHAT IS HAPPENING TODAY?
A. There are two major EU announcements that markets are awaiting: agreement by the Eurozone and IMF to pay the next installment of Greece’s original rescue, which amounts to €12bn; and an agreement among EU member states and institutions as to what form a new bailout will take. Eurogroup and EU finance ministers are meeting today to try and work out a second bailout deal, which will be rubber-stamped by EU leaders on Thursday and Friday if all goes to plan.
Q. SO GREECE AND THE EURO ARE SAFE IF THEY STRIKE A DEAL?
A. Far from it. Even if the EU can agree to the terms of a new rescue, it will be conditional upon Athens accepting another round of austerity cuts. With Greek Prime Minister George Papandreou scrambling to find the support needed, that is by no means a given. The current package, which does not have the support of most Greeks according to recent polling, already requires the state to sell off €50bn worth of assets.
Q. HOW MUCH IS THE UK ON THE HOOK FOR IN A NEW RESCUE?
A. It is still not clear. The UK Treasury insists that we will not pay for a new Greek bailout except through the IMF, whose loans we guarantee to the tune of five per cent. But if the EU votes to use the European Financial Stability Mechanism to pay for the rescue, we will be underwriting 13.5 per cent of the rescue. The problem is that Eurozone member states outnumber non-euro states in the voting.