Euro-Zone Nations Offer $40 Billion to Greece


A financial rescue of the debt-laden Greek economy moved into focus Sunday when the 16 nations that use the euro offered to loan Athens up to €30 billion at rates far below what the debt-laden country is paying now.

The decision, made after a telephone conference of euro-zone finance minister, provides for the first time the details sought by Greece — and the financial markets — over how an emergency aid package would be structured.

Greece has so far not formally requested aid from the European Union, whose heads of government still have to sign off on the plan before it comes into force.

But in spelling out the terms, the eurozone nations took an important step Sunday to ensure that they can move quickly with a rescue if Greece requests it.

The decision followed weeks of argument over whether to make a rescue plan available and what terms would be applied. Germany has led the opposition to any package of measures that could be seen as a straight bailout or a granting of soft loans.

“This is a step of clarification that markets are waiting for — it shows there is money behind this,” said Jean-Claude Juncker, the prime minister and finance minister of Luxembourg and head of the Eurogroup — the finance ministers of the euro-zone nations.

“The initiative for activating the mechanism rests with the Greek government,” he said at news conference in Brussels after the Sunday afternoon teleconference.

The interest rate charged on the European contribution would be around 5 percent for a three-year loan — more than the amount charged by the International Monetary Fund.

The I.M.F. will also make financing available to Greece, though the amount was yet to be determined. Olli Rehn, the European Union’s monetary affairs commissioner, suggested that euro-zone nations might end up providing two-thirds of the final package, with one-third coming from the I.M.F.

Mr. Juncker said the potential eurozone loan would not be a violation of European Union prohibition against one government bailout another, since the interest rate — even though lower than the market rate Greece is paying now — would not represent a concession.

Mr. Rehn said that the interest rate had been calculated using a formula similar to that employed by the I.M.F. However, instead of using the fund’s benchmark, the euro-zone would use the Euribor rate — the average daily rate euro-zone banks charge one another — which is slightly higher.

All 16 nations of the euro zone would take part in any rescue, making contributions based on the proportion they pay into the European Central Bank’s capital reserves. That amount is roughly based on the size of their economies.

Even other nations with financing difficulties — including Portugal, Ireland and Spain — have agreed to take part.

Mr. Rehn said he would not take any position on whether the loan arrangements for Greece would provide a template for other crisis interventions in the euro zone, if they are needed.

In a statement the European Commission president, José Manuel Barroso, described the decision as one that “shows that the euro area is serious in doing what is necessary to secure financial stability.” NYT



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