Euro countries voice doubts over Greek

By Gabriele Steinhauser

Associated Press

Published: Wednesday, Feb. 15 2012 5:00 a.m. MST

Greek Finance Minister Evangelos Venizelos, left, speaks with Greek President Karolos Papoulias, during their meeting at the Presidential palace in Athens, on Wednesday, Feb. 15, 2012. Greece's finance minister said that all pending issues in its international creditors' requirements for the country's second bailout will be completed ahead of a Wednesday evening conference call between eurozone finance ministers.Venizelos made the comments after a meeting with President Papoulias, who he said will give up his presidential salary to help in the crisis.

Petros Giannakouris, Associated Press

BRUSSELS — There are strong doubts among some of the countries that use the euro over whether a second massive bailout for Greece will actually work, officials said Wednesday, even as Athens rushed to meet tough conditions to qualify for the €130 billion ($170 billion) rescue.

The delays to Athens' aid money come after almost two years of frantic efforts to save Greece from bankruptcy and secure its place in the 17-country currency union.

But circumstances have changed since the eurozone agreed on a first €110 billion ($144.86 billion) rescue for Greece back in 2010. Several politicians — especially in rich euro countries like Germany, the Netherlands and Finland — have grown tired of Greece repeatedly missing budget targets and failing to implement promised spending cuts, economic reforms and sales of state assets.

At the same time, at least some policymakers feel confident that the eurozone is now strong enough to handle a default by Greece, which is one of the smallest economies in the currency union, responsible for only about 2 percent of its economic output.

"There are many in the eurozone who don't want us any more," Greece's Finance Minister Evangelos Venizelos told the country's president, Karolos Papoulias, during a meeting to inform him of the latest developments. Greece, Venizelos added, had to persuade the skeptics that the country could stay in the eurozone and regain lost ground in reforming its economy.

"We are facing a situation that is particular because we are constantly being given new terms and conditions," the finance minister said.

This assessment was backed by an official in Brussels. "There is resentments, mistrust, really bitter debate," said a European official who has been briefed on recent talks between eurozone finance chiefs. The official was speaking on condition of anonymity because of the sensitivity of the topic.

Tuesday night, a meeting between eurozone finance ministers planned for Wednesday was canceled after Athens failed to deliver in time on several demands made the previous week. Eurogroup chairman Jean-Claude Juncker said he was still missing details on how to save an extra €325 million ($427.99 million) as well as written assurances by the leaders of the main political parties that they will stick to a second bailout program after elections expected for April.

Officials in Athens said Wednesday that letters from the leaders of both the Socialist and the center-right New Democracy party promising to implement the new austerity measures had now been prepared. They also said that the €325 million ($427.99 million) in cuts should also be secured by the end of the day.

But the European official briefed on recent talks said even those assurances may not be enough.

"People don't trust the Greeks and that is the main element," he said.

Adding to that are concerns that the upcoming election campaign will forcibly slow down or hinder implementation — assurances or not.

"Gaps in implementation (during elections) are real," the official said.

At their most recent get-together, last week, finance chiefs lashed out at their Greek colleague, with Finland's Finance Minister Jutta Urpilainen chewing Evangelos Venizelos out in front of the cameras over a documents she said still had not been signed.

However, other European officials, who also declined to be named, said that they nevertheless expected the €130 billion ($171.2 billion) bailout to go ahead. There are fears that an uncontrolled default could hurt other week countries like Portugal and even rock some of the big economies in Europe's core.

Instead of the Wednesday meeting, finance ministers will in the evening discuss the latest developments in Greece in a teleconference at 1600 GMT and meet in person in Brussels on Monday.

At that meeting, they will be expected to give Greece the green light to launch a bond-swap deal it has negotiated with banks and other private investors over the past weeks. That deal is supposed to slice some €100 billion ($131.69 billion) off Greece's €350 billion ($460.92 billion) debt and give Greece much more time to repay the rest of the money it owes private bondholders.

However, for the bond-swap to work it has to be launched quickly, as it will take several weeks to implement and has to be finalized before March 20, when Greece faces a €14.5 billion ($19.1 billion) bond redemption it cannot afford to pay.

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Becartoros reported from Athens, Greece.

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