THE GREEK debt drama took a sudden turn last night as Europe’s most powerful finance ministers gathered in Luxembourg to discuss its precarious fiscal position.
Amid anxiety that Greece is struggling to avoid an eventual default on its debt, the country rebuffed a German report that it might leave the euro zone.
Euro group president Jean-Claude Juncker, who attended the unscheduled meeting, told reporters that Greece “does need a further adjustment” and it will be discussed at the group’s next meeting. German minister Wolfgang Schäuble and French minister Christine Lagarde also attended, along with a small number of other senior figures. The opposition of the populist True Finns party to Finland’s participation in the Portugal’s bailout programme was also under discussion.
Euro zone ministers are not scheduled to meet again for another 10 days. The talks took place against the backdrop of a report in the online version of Germany’s Der Spiegel, which quoted German government documents saying Greece was considering leaving the euro zone.
The report, quickly denied by Germany, also referred to a meeting of all 17 euro group ministers in Luxembourg. “It’s certainly not a fully-fledged meeting, or an emergency or anything of that kind,” said a euro zone official of the Luxembourg talks.
Greece and the European authorities have denied for months that any restructuring of its debt – code for default – is in prospect.
But officials and diplomats are increasingly gloomy about the country’s prospects of returning to private debt markets next year as foreseen in its rescue plan. Europe’s leaders fear any restructuring would undermine investor confidence in their effort to prop up such aid recipients as Ireland and other vulnerable countries.
However, officials accept any extension of the Greek aid programme may prove politically impossible for German chancellor Angela Merkel.
A European Commission spokesman said only that the EU’s executive branch had “no comment” on the story in Der Spiegel.
However, a government spokesman in Berlin went further. He said there “was neither the intention nor would there be” for Greece to leave the single currency “as far as we know”. The finance ministry in Athens and Greek deputy finance minister Filippos Sachinidis each denied the report, but Der Spiegel said it stood by the story.
EU officials believe ministers will approve a lower interest rate on Portugal’s bailout loans than the current rate on Irish rescue loans, strengthening Dublin’s case for a rate cut.
The commission is expected to invoke a written procedure next week to prepare for a lowering of the interest it levies on its portion of the rescue loans. The cut may not be made until agreement, still elusive, on a quid pro quo from Ireland.