BRUSSELS — Greece has made progress convincing the rest of the eurozone that it should get a $170 billion bailout — but the country's austerity efforts will need much tighter surveillance, the chairman of the eurozone's finance ministers said Wednesday.
During a 3½ hour conference call between the finance chiefs of the 17 countries that use the euro, the ministers received assurances from Greece that it had found a further $424.5 million in cuts on top of austerity measures already agreed.
They also welcomed written commitments from the leaders of the two Greek parties that make up the coalition government to implement promised cuts and reforms even after elections expected in April.
However, in a sign of the deep distrust that has built up — especially among rich euro nations like Germany, the Netherlands and Finland — Jean-Claude Juncker, the prime minister of Luxembourg who also chairs the finance ministers' meetings, said better surveillance mechanisms had to be set up before new aid could be released.
"Further considerations are necessary regarding the specific mechanisms to strengthen the surveillance of program implementation and to ensure that priority is given to debt servicing," Juncker said.
The statement appeared to be a reference to a Franco-German proposal to set up an account, separate from Greece's general budget, that would be dedicated to paying off Greece's massive debt. It was unclear whether this account would only manage the bailout money or whether government revenue could also be funneled into it.
Such an account would give the eurozone more control over what Greece does with its money, after the country has repeatedly missed budget, reform and privatization targets over the past two years. However, it would also constitute an unprecedented interference into the fiscal affairs of a sovereign state in Europe.
The European Commission, which is in charge of economic surveillance in the European Union, is now working on a specific proposal for such an escrow account, which will be present to the ministers at a meeting on Monday.
A German government official described the conference call as "intense and at times very technical." He said the participants received information on some of the debated topics only minutes before the call started, "which because of the short notice couldn't be verified and evaluated in detail."
The official said no minister challenged the idea that surveillance had to be strengthened and that paying off Greece's debts should have priority. He was speaking on condition of anonymity to discuss the confidential discussion between ministers.
The finance ministers held their conference call amid doubts in some countries over whether the $169.8 billion package of rescue loans, which comes on top of a $143.6 billion rescue granted in May 2010, can ultimately save recession-ridden Greece.
Yet, despite rumors that the bailout could be delayed until after the elections, Juncker said he expected the finance ministers "to be able to take all the necessary decisions" at their next meeting on Monday.
The second bailout is also tied to a $130.6 billion debt-relief deal with bondholders, under which the private creditors will swap the bonds they hold for ones with lower values and longer maturity dates.
Greece does not have much time to secure the bailout and implement the bond swap with investors because it risks defaulting on a $18.9 billion bond redemption in late March.
In Athens, Greek Finance Minister Evangelos Venizelos said all the issues concerning covering this year's austerity targets were clarified during Wednesday's conference call.
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