INTENSIVE TALKS on a rescue plan for Greece went down to the wire last night as Germany resisted demands to flesh out the scale, scope and timing of any intervention with its EU partners.
Ahead of an EU summit in Brussels this evening, European leaders face rising market demands for clarity over an aid scheme and resistance from the European Central Bank (ECB) to the use of financing from the International Monetary Fund (IMF).
While chancellor Angela Merkel has set the involvement of IMF loans as a core principle for Germany’s involvement in any rescue, sources briefed on the talks said there was still no clarity from Berlin over the extent to which she is prepared to set out how much money Berlin might lend Athens. Dr Merkel’s coalition is divided on the question of aid for Greece and she also faces resistance from the German public.
Also unclear is whether French president Nicolas Sarkozy is prepared to set aside his country’s reservations about including IMF financing in any package.
Greek premier George Papandreou has not formally asked for EU aid, but argues that agreement on a rescue mechanism would ease pressure on his borrowing costs.
The summit is the last scheduled engagement between EU leaders before Athens starts refinancing some €20 billion in debt next month. Uncertainty about the prospects of a rescue plan weighed on the euro, which slumped yesterday to a 10-month low.
In Brussels and other EU capitals, it is widely held EU leaders will have to make some form of declaration on Greece and go beyond the general pledge of unspecific help made last month.
There is doubt as to whether a mooted meeting of the leaders of the 16 euro-zone members would take place immediately before the summit, as suggested by Mr Sarkozy.
Although tentative preparations are under way, a senior European diplomat said such a meeting has not yet been scheduled. Any sign a meeting has been set would be taken as a clear indication a deal is imminent – as it would not be called if there was no prospect of success.
European Commission chief José Manuel Barroso stepped up pressure on Dr Merkel last night, telling reporters he was counting on “the sense of responsibility” of EU member states. “It is in Greece’s interest, without doubt, but also in the interest of the euro zone as a whole to guarantee a decision on this question,” he said.
Mr Barroso added the ECB and its president, Jean-Claude Trichet, shared this position.
However, ECB executive board member Lorenzo Bini Smaghhi told a German newspaper any recourse to the IMF would be detrimental to the stability of the euro because it would suggest the EU was unable to keep its house in order: “The image of the euro would be that of a currency that is able to survive only with the external support of an international organisation.”