Eurozone leaders say leaders of two main Greek political parties must commit in writing to austerity measures, economic forms in order to receive €11B in bailout funds
November 7, 2011
– Greece can get a crucial euro8 billion ($11 billion) slice of bailout money this month if the leaders of the two main parties both commit in writing to the terms of the countries' two massive bailouts and the austerity measures and economic reforms that they require, eurozone finance chiefs said Monday.
That payment, which has been delayed by two months, would head off a potentially disastrous default as early as December.
Jean-Claude Juncker, the Luxembourg prime minister who also chairs the eurozone finance ministers meetings, said that ministers at their get-together in Brussels asked for a letter co-signed by the two party leaders that they will implement the program, drawn up at a summit of European leaders on Oct. 27.
Such cross-party commitment is important as Greece gears up for new elections early next year.
While finance ministers were meeting in Brussels, Greek Prime Minister George Papandreou and opposition party leader Antonis Samaras were trying to form a unity government that would lead the country in the meantime.
"It should have been done months ago," Juncker said of the cross-party government.
The ministers also spelled out technical details of their plan to give their bailout fund more leverage. The eurozone wants to increase the firepower of the euro440 billion European Financial Stability Facility to euro1 trillion, by allowing it to insure bond issues from shaky countries like Italy and Spain and by seeking investors from outside the eurozone.
The CEO of the EFSF, Klaus Regling, said the eurozone would create one or more co-investment funds that could take on funding from private investors like big banks and pension funds, non-European countries, or from the International Monetary Fund.
Investors in those fund would also receive some insurance against potential losses. However, Regling did not provide a figure for how much of potential losses would be insured.
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