BRUSSELS ? At the same meeting where Greece?s latest economic plans were greeted with blunt skepticism, a television microphone accidentally recorded a very different exchange between a minister from Germany and a colleague from another bailout recipient, Portugal.
If Lisbon, which faces an austerity-driven economic slump similar to Greece?s, needed to ease its bailout terms, ?we would be ready to do it,? said the German finance minister, Wolfgang Sch�uble.
?That?s much appreciated,? replied his counterpart from Portugal, Vitor Gaspar.
The conversation, broadcast on the private Portuguese network TVI, illustrated a stark fact as the euro zone?s debt crisis enters its third year: While Portugal, Ireland and other countries may be struggling, Greece has found itself in a category of its own ? a nation the rest of Europe no longer trusts.
The gathering Thursday night of finance ministers from the 17-nation euro zone, together with leaders of the European Central Bank and the International Monetary Fund, was supposed to bless a much-delayed agreement among Greek politicians on austerity measures required to win a new bailout of ?130 billion, or $171 billion.
Instead, the ministers made it plain that they did not believe the figures, saying that Greece needed to find ?325 million extra in savings before the bailout was signed off on, hopefully next Wednesday.
The Greek Parliament and main political parties will have to endorse the austerity measures. And if Greece gets its new bailout, the money may be paid into a special account that would cover debt repayments before any money was released to general government spending.
According to some unofficial estimates, up to 70 percent of Greece?s bailout money might be spent this way.
The rebuff from euro zone ministers was greeted with violence on the streets of Athens during a general strike Friday, while five politicians resigned, plunging the government into a new crisis before the pivotal vote in Parliament on Sunday.
After a period of relative calm, financial markets and the euro fell. The Euro Stoxx 50 index, a barometer of euro zone blue-chips, fell 1.65 percent, while the FTSE 100 index in London fell 0.73 percent. In New York, the Standard & Poor?s 500 index was down 0.92 percent by midafternoon. The euro declined to $1.3175 from $1.3286 late Thursday in New York.
The failure to reach a final deal and the disorder in Athens have ?been an excuse to deflate some of the Greek-related optimism in the market,? Gary Baker, an equity strategist at Bank of America Securities Merrill Lynch in London, said, though he cautioned against reading too much into the market moves.
It is not in the interest of the euro zone or of Greece to see the country default, and all parties are hoping that the Greek Parliament will approve the deal on Sunday.
Even if that happens, there is work to be done. A deal with the European Central Bank to help ease Greece?s debt burden by giving up profits on its holdings of Greek bonds has not yet been struck. In Berlin, Mr. Sch�uble, briefing lawmakers, said that current plans would leave Greece?s debt as high as 136 percent of gross domestic product by 2020, as opposed to 120 percent foreseen in the country?s second bailout, Bloomberg News reported.
Behind closed doors in Brussels the lack of trust was evident, and it is this that may have put the entire bailout at risk.
In one of several tough exchanges, the Greek finance minister, Evangelos Venizelos, was taken to task by Mr. Sch�uble for having failed to begin the required negotiations with labor unions to enable the minimum wage to be reduced. Mr. Venizelos had been reluctant to do that before knowing the bailout would be approved; his European partners saw this as time-wasting, according to one official briefed on the talks but not authorized to describe confidential discussions.
Ministers vented their frustration in public as well. ?We cannot live with a system where promises are made and repeated and repeated and implementation measures are from time to time too weak,? said Jean-Claude Juncker of Luxembourg, who chairs meetings of the 17 euro zone finance ministers.
Source: http://feeds.nytimes.com/click.phdo?i=ed6ba0035ec91a4a0a0c74958929eb9e
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