The resistance of the Greek super-creditors cracks. Germany, Finland and the Netherlands (the governments most resistant to public intervention in Athens) soften their positions at today's Vienna summit of the EFC, the Economic and Financial Committee which brings together senior officials from European finance ministries. Northern Europeans would like any new intervention in support of Greece to be conditional on a renegotiation of the debt held by private investors. However time is running out. The IMF has imposed that by 29 June the EU must guarantee the financing of Athens in the coming years, otherwise it will not release the 12 billion installment that would prevent a Greek default in July. In May 2010, the EU and the IMF made a 110 billion loan available to the Greek government to isolate the country from the bond market until 2013. With the worsening of the recession, however, next year Athens will need at least 60 billion euros more.
According to rumors leaked to Reuters, today's meeting finalized an 'à la carte' menu of economic measures for the June 20 Ecofin summit. The options available to economy ministers should be based on the Vienna Initiative, which in 2009 coordinated commercial banks and international institutions in order to avoid the collapse of Central and Eastern Europe. At the height of the subprime crisis, many Western lenders withdrew credit lines from their branches in the region, unleashing a currency and payments crisis. Hungary had to negotiate an aid package with the IMF.
With the likelihood of a default receding on the horizon next summer, markets reacted euphoria to the leak and the euro hit $1,4413 in Asian markets today morning, the highest value in recent three weeks. The increased appetite for risk caused the yen to slide against the greenback and pushed up the quotations of the Australian and New Zealand dollars. (fs)
