EU ministers pile on the pressure
Austria points to Greece’s huge privatization potential; Dutch minister admits talks include restructuring
European finance ministers stepped up the pressure on Greece to sell assets and deepen spending cuts to win an increase of its 110-billion-euro aid package and more time to repay the loans.
In deliberations clouded by the absence of International Monetary Fund Managing Director Dominique Strauss-Kahn, Europe’s rich countries tied extra money to pledges by Greece to reap more revenue at home and weighed whether to make bondholders share the pain.
“Greece also has a huge privatization potential and the Greeks should help themselves before calling for more money,” Austrian Finance Minister Maria Fekter told reporters before a euro crisis meeting in Brussels yesterday.
Greek bonds fell after the euro area’s economic powerhouses put up hurdles to an expanded aid pack- age, with public discontent simmering in northern Europe over the costs of propping up high-deficit countries on the continent’s periphery.
Greece’s debt is expected to grow and top 166 percent of economic output in 2013, as the country remains stuck in recession and struggles to get a grip on budget shortfalls. Most investors and analysts believe the debt load is so big, and the economy so weak, that only a restructuring will help it back on its feet. Yesterday, for the first time, a European finance minister conceded that a debt restructuring was being discussed.
“Of course we discuss all kinds of topics, including restructuring,” Dutch Finance Minister Jan Kees de Jager said as he arrived at the meeting. “But in public, we are very reluctant about discussing and debating restructuring.”
Although de Jager did not say whether his country favored a restructuring, his statement clashed with comments from other European officials, who have denied that a restructuring was even being considered as an option. Several European officials have hinted in recent days that a second bailout for Greece may be necessary, but only if the government is willing to carry out more reforms.