MOVES TO postpone a second Greek bailout until the autumn underline the complexity of the challenge EU leaders set themselves when they chose to push for private creditor participation in the rescue.

Even though four working weeks remain before Europe shuts down for August, finance ministers have concluded that there is little prospect of an agreement by then. They are scheduled to meet again next Monday, but there is no expectation of a deal before September.

In a single sweep, this shattered the timetable EU leaders put in place at a summit meeting less than a fortnight ago. The sense back then was that a deal to provide clarity over the situation in Greece was within grasp. At the highest levels in Brussels, a familiar sense of gloom has since returned.

For the Government, still toiling hard on the road to rectitude, the danger remains that the effort will be blown off course. Even though Taoiseach Enda Kenny emerged from the summit with reassurances from his counterparts that Ireland would receive special protection in the event of a Greek default, the sense remains that there is no such thing as a comprehensive insurance policy in a scene like this.

For as long as the medium-term funding outlook for Greece is uncertain, Ireland will remain in the direct line of fire. That sense of vulnerability is set to continue for some time to come, as there is huge doubt over the effort to enlist private investors into the Greek rescue effort.

Questions abound. Via the Institute of International Finance, some of world’s biggest banks have signalled their willingness to take part in the rescue effort. Yet this was no more than a declaration of intent. Standard Poor’s adverse assessment of the French plan for a Greek debt rollover illustrates just how tricky the riddle is. The SP manoeuvre is significant for three reasons.

First, the organisation is generally perceived to be the most powerful of the ratings agencies. Although Europe awaits the view of Moody’s and Fitch, the French initiative would be on much stronger ground if SP was on board.

Second, French institutions are the largest investors in Greek sovereign debt. For this reason, any serious attempt at private creditor bail-in would be meaningless without their participation.

Third, the extent of French exposure to Greece is such that the convoluted “burden-sharing” scheme dreamt up in Paris was relatively soft on investors.

Although the point is made in Brussels that the French plan is but one of many under consideration, the others are held to be tougher on investors. This explains the slack take-up of Berlin’s plan by German banks, and points to the likelihood of an adverse reception by SP and its rivals.

The ideal solution, of course, would deliver unanimous endorsement by the credit rating agencies. The European Central Bank, which also uses Canadian firm DBRS, is reported to be willing to accept Greek debt as collateral unless all four agencies declare the country to be in default. Still, that does not get around the serious problem posed by potential payouts on credit default swaps on Greek bonds, a form of insurance against an investment loss, if any of the agencies find it to be in default.

Such a move remains a very big risk in the present malaise, and it is something EU leaders are very keen to avoid. All of this illustrates just how difficult it is to develop something which marries German demands for meaningful private sector participation with the demand that the endeavour is entirely voluntary.

The dangers don’t stop there. Dutch finance minister Jan Kees de Jager adopted a very hard line in relation to the second Greek bailout in a teleconference with his counterparts last Saturday. His stance reflects the difficulty in the effort to ensure political support in the Netherlands for the bailout strategy. The same kind of pressure explains the Finnish push for Greece to provide collateral in exchange for a new round of rescue loan.

The Greek crisis is as grave as ever. On Friday, the IMF executive board will release its €3 billion portion of a €12 billion loan to Athens under its first bailout plan. This money was in doubt for weeks, threatening default. That roadblock is out of the way now, but the most fundamental problems remain.