Hopes rise to avert Greek debt default

BRUSSELS, Belgium — Greece’s hopes to finally get its bailout and dodge default next month were boosted Friday, when key European leaders, including German Chancellor Angela Merkel, sounded confident a deal could be agreed.

BRUSSELS, Belgium — Greece’s hopes to finally get its bailout and dodge default next month were boosted Friday, when key European leaders, including German Chancellor Angela Merkel, sounded confident a deal could be agreed.

The leaders of Germany, Italy and Greece are “optimistic” the C130 billion ($170 billion) rescue package can be cleared next week, a spokesman for Merkel said Friday after the three held a conference call. Hours earlier, the French prime minister warned against letting Greece default.

That means the euro currency union’s main powers are now pushing toward resolving the uncertainty hanging over Greece at a meeting of eurozone finance ministers on Monday.

Agreement on the bailout, which comes on top of a C110 billion ($145 billion) rescue granted in 2010, has been delayed for months due to doubts over Greek political leaders’ commitment to tough new austerity measures as well as the worsening economic situation in the country that kicked off Europe’s debt crisis two years ago.

Some eurozone governments’ caution over handing out more money to Athens had investors wondering whether Greece would be forced to default and leave the euro instead. After days of confusion, Germany — the main bankroller for the bailouts — made it clear it wanted to see Greece’s deal through.

“The three leaders are optimistic that the finance ministers can find a solution to the pending questions at the Eurogroup on Monday and thereby contribute to the stabilization of Greece,” Steffen Seibert said in a statement, after Merkel, Italian Prime Minister Mario Monti and Greece’s Premier Lucas Papademos held a conference call earlier Friday.

Papademos later also called Dutch Prime Minister Mark Rutte, whose country is one of the biggest bailout skeptics.

Greece is under big pressure to get the green light on the bailout so it can move ahead with a related C100 billion ($130 billion) debt-relief deal with private bondholders that till take several weeks to implement. That deal has to be completed before March 20, when Athens faces a C14.5 billion bond redemption it cannot afford.

Tensions between Greece and the rest of the eurozone hit new highs this week as politicians in Athens and other European capitals blamed each other for the problems related to the bailout. Seven people were detained Friday following an anti-austerity protest in which eggs were thrown at the German embassy in central Athens.

But French Prime Minister Francois Fillon warned that the fallout of letting the country go up in financial flames would be far-reaching.

“We must do absolutely everything so that there is not a default by Greece, which would be dramatic for Greeks themselves and dramatic for Europeans,” he said on RTL radio Friday.

Now that the Greek Parliament has approved austerity measures demanded by international creditors and banks have agreed to help in the bailout, “the Europeans must now honour their commitments. That is the position that France is defending,” Fillon said.

Some European politicians have downplayed the effects of a default by Greece, but Fillon called that “totally irresponsible.”

The last issues to resolve before a bailout is rubber-stamped include making sure the aid program brings Greece’s debt down to a sustainable level and setting tighter controls on Athens’ spending decisions.

Germany and several other countries want Greece to set up a form of escrow account — separate from the main government budget — that would give priority to servicing Greece’s debt over spending on government services.

The European Commission, the EU’s executive, is working on several options for such an escrow account. An EU official said that, among several options, the Commission is looking at a “transit account” through which Greece’s bailout money would be funneled.

The account would have a “hierarchy of payments,” with servicing the country’s debt at the very top, the official said. He was speaking on condition of anonymity because the details of the plan are still in flux.

The official said there was “a critical mass” of euro countries in favour of such an account. He also said Greece was not in a position to challenge the plan.

“It’s part of it (the bailout deal) as long as some delegations want it to be,” he added.

The eurozone also still needs to decide on additional measures to bring Greece’s debt down to 120 per cent of economic output by 2020 — the target leaders defined when they tentatively agreed on more aid in October.

The current plan, which includes the C130 billion bailout, the C100 billion debt relief and the new austerity measures, would leave Athens debt close to 129 per cent of economic output at the end of the decade.

The International Monetary Fund and the eurozone believe such a high debt load would be unsustainable without outside assistance.

Just Posted

The Latest: UK leader congratulates royals on birth of son

LONDON — The Latest on the royal baby birth: 1:50 p.m. British… Continue reading

Key events in the life of William, Kate and their family

LONDON — The Duchess of Cambridge gave birth Monday to a baby… Continue reading

Broncos families surprised obituaries are on website selling services

Some families of Humboldt Broncos bus crash victims are surprised to learn… Continue reading

‘It’s limitless:’ Paralyzed toddler moves from homemade wheelchair to treadmill

EDMONTON — Evelyn Moore sings the alphabet song as her tiny running… Continue reading

Shania Twain apologizes for saying she would have voted for Donald Trump

Shania Twain is apologizing after telling a British newspaper that she would… Continue reading

Replay Red Deer April 22, 2018

Watch weekly news highlights from Red Deer and Central Alberta

Crosby, Penguins keep 3rd straight championship in sight

PHILADELPHIA — Sidney Crosby tormented the Flyers just as he has from… Continue reading

29-year-old chef dies after collapsing at London Marathon

London Marathon organizers say a 29-year-old man died after collapsing near the… Continue reading

Greece beats budget target as it looks to post-bailout era

ATHENS, Greece — Greece has beaten its budget targets for a third… Continue reading

Etiquette and protocol highlights for royal wedding guests

NEW YORK — Grab those nude stockings, ladies. You’ll be at a… Continue reading

Federal environment minister defends BP Canada’s plans to drill in N.S.

HALIFAX — Federal Environment and Climate Change Minister Catherine McKenna is defending… Continue reading

Facebook’s privacy changes look different for Europeans and Americans

All 2.2 billion people who use Facebook will soon see changes to… Continue reading

Vermont wants to turn tourists into workers

Vermont has forest trails, yoga retreats, breweries galore – and a labor… Continue reading

Trump leading on North Korea, says envoy to Canada as G7 ministers meet

TORONTO — Donald Trump’s envoy to Canada says her president is leading… Continue reading

Most Read


Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month