Eurolanden vergaderen om 'totale ramp' Griekenland te voorkomen (en)
EUOBSERVER / BRUSSELS - Eurozone economy chiefs are in Luxembourg for another emergency meeting to attempt to patch together a solution to the Greek crisis that, in the words of Finland's finance minister, does not cause "total disaster".
Heading into the meeting, Jyrki Katainen told reporters: "We would like to have a model that does not create total disaster, but will indicate to the private sector burden sharing. I cannot say what kind of model is the best."
They are expected to agree to the dispersal of a fifth tranche, amounting to €12 billion, of its €110 billion bail-out agreed last May in return for Athens' pushing through a fresh round of austerity and a fire-sale of public assets.
The ministers will consider the Greek government's plans, which would deliver public sector cuts and tax hikes worth €28 billion and privatisation of €50 billion of state property over the next five years.
This mid-term package, approved at the committee stage but yet to be backed by the full parliament, is being presented by the new Greek finance minister, Evangelos Venizelos, in his first international outing since last week's cabinet reshuffle intended to bolster international faith in Athens' commitment to pushing through the measures.
The new-look but embattled government weakened last week by a trio of MP resignations, with a slim, five-seat majority facing down an opposition that rejects the mid-term plan, is to hold a vote of confidence on Tuesday in an effort to convince core eurozone states, the ECB and the IMF that it it has sufficient backing in the chamber to deliver on its promises.
A vote of the full sitting of chamber on the package has not yet been scheduled, but is to take place before the end of the month.
However, the austerity already imposed has delivered an economic tailspin and provoked widespread civil unrest, rolling demonstrations in public squares, blockades of government offices and a dozen one-day general strikes.
The General Confederation of Greek Workers (GSEE), the main private sector union, announced on Friday that it is to hold its first 48-hour work stoppage to coincide with the plenary vote.
Venizelos was tight-lipped about what he expected out of the Sunday session.
"It is a great opportunity to repeat the strong commitment of the Greek govt and the strong will of the Greek people for the imposition of the programme," he said. "We can achieve our targets."
The question of an agreement on the dispersal of the latest tranche of cash has been separated from the wider question of a second Greek bail-out. No accord on such a move is expected before mid-July and could take even longer as EU leaders are very far from alignment on this question.
Belgian finance minister Didier Reynders told reporters he was optimistic that the meeting would reach a deal on the next tranche but added that there would be no deal on a second bail-out.
He also suggested that ministers may just agree an immediate €6 billion dispersal, enough for the country's most immediate funding needs in order to prevent default, with the other €6 billion coming at some later stage.
On Friday, German Chancellor Angela Merkel i and French President Nicolas Sarkozy i came to an agreement attempting to draw a line under a public battle between Berlin and the ECB over the extent of private bondholder involvement in any second bail-out of the Hellenic Republic.
Merkel is facing perhaps insurmountable resistance domestically to agreeing to another bail-out of the state without significant participation of private creditors.
However, the ECB and now much of the eurozone are frightened that any such move, perhaps even in a softer, more voluntary form of cajoling bondholders or delivering incentives to back burden-sharing will provoke credit rating agencies declaring Greece as having defaulted.
Such an event would then likely lead to a creditor rush for the doors across the eurozone periphery, and perhaps further.
On Saturday, Eurogroup chief Jean-Claude Juncker i said: "We are playing with fire."
"Contagion from bankruptcy could reach Portugal and Ireland, and then because of the high debt, Italy and Belgium, even before Spain," Juncker continued.
He also would not be drawn on whether EU was already in contact with creditors or what incentives could be given, saying only "these are things which are under discussion."
His comments came after Moody's Investors Service on Friday said it may cut its rating for Italy.
It is thought that in response, Rome may announce some new measures in the coming days, but the government is restrained by what fresh austerity it can impose after its recent severe regional election and referendum defeats.
Ireland for its part is in the Grand Duchy with one simple goal: to prevent any deal that would spread Greece's acute woes westward.
"I'm not quite sure what is going to be achieved, but ... the primary Irish interest here is to ensure that whatever solution is put in place, it doesn't contain elements that would affect us adversely," Irish finance minister Michael Noonan said ahead of the meeting.
"No contagion for Ireland, regardless of what the provisions are. We don't want knock on effects from a Greek deal."