Brussels, 07/07/2011 (Agence Europe) -Dutch Finance Minister Jan Kees de Jager has described the voluntary participation of the private sector in the second financial bailout for Greece currently being put together as “unrealistic”. He believes that a “mandatory” contribution of the financial institutions must now be considered. “I think we have to accept that a voluntary contribution is unrealistic”, he told the Dutch financial daily Financieele Dagblad of Thursday 7 July. If a mandatory contribution of the banks leads to a “temporary and isolated” downgrading of Greece's financial rating to the level of default, “this is not so bad, because Greece cannot go to the credit markets anyway now or in the near future”, he added.
This is the first time that a European finance minister has publicly raised the issue of a mandatory participation of the private sector in the costs of the future Greek bailout, which has been estimated at €120 billion. The Dutch government is under a great deal of pressure from the population and the populist parties, who are refusing to put their hands in their pockets to continue supporting Greece any longer. When asked about this on Thursday, the president of the ECB, Jean-Claude Trichet, was dismissive: “to the best of my knowledge, the position of the Eurogroup has not changed”. At the end of June, the Eurogroup welcomed the “continued voluntary involvement of the private sector in the form of voluntary and informal re-financing of the Greek debt when it matures” (EUROPE 10401).
The Europeans are struggling to find the right formula to allow a voluntary involvement of the financial industry in the costs of the second Greek bailout. They hope that this involvement will be substantial enough (€30 billion?) to reduce the stake of the public coffers. However, the option put forward by the French banks, which had been on the inside track, has been disqualified by the American ratings agency Standard and Poor's. According to the agency, the solution of, amongst other things, reinvesting a proportion of the Greek debt instruments when they reach maturity in 2014, would cause Athens to default (EUROPE 10411). The Germans then put their proposal for the involvement of the private sector back on the table. This proposal, which would entail extending the maturity of the Greek debt by seven years, had been abandoned due to head-on opposition from the ECB. Bankers and representatives of the mlember states and the European Commission met in Rome on Wednesday and Thursday, to continue talks on the private sector contribution. It appears certain that the Eurogroup will not reach any decision on this on Monday 11 July. (M.B./transl.fl)