French President Nicolas Sarkozy will meet German Chancellor Angela Merkel Oct. 9 as European officials begin debating a new phase in their efforts to prevent a Greek default.
There’s “no credible alternative” to channeling aid to Greece, Sarkozy said Sept. 30 after meeting Greek Prime Minister George Papandreouin Paris.
His remarks signal the fight over an expansion of Europe’s bailout tool kit that will follow the enactment in coming weeks of the upgraded 440 billion-euro ($594 billion) European Financial Stability Facility. Euro finance chiefs in the new week will discuss accelerating enactment of a permanent rescue fund that provides more capital and a way of managing defaults.
“The failure of Greece would be the failure of all of Europe,” Sarkozy told reporters. “Remember in 2008, when the U.S. let Lehman Brothers fail, the global financial system paid the price. For both economic reasons and moral reasons, we can’t let Greece fail.” Sarkozy said he will travel to Berlin to meet Merkel to discuss speeding the economic integration of the euro region. The two leaders will meet on Oct. 9, said a person with knowledge of the plan, who declined to be identified because the date hasn’t been formally announced.
Oct. 9 Meeting:
Steffen Seibert, Merkel’s chief spokesman, declined to comment on the date to Bloomberg News today, saying that the two leaders plan to meet before the next European Union Council summit in mid-October. Greek bonds, debt of other bailed-out nations and European stocks gained this past week on speculation that euro leaders were responding to international pressure to address the crisis, which began in Greece in late 2009.
Europeans haven’t responded “as effectively as they needed to,” President Barack Obama said during a roundtable discussion at the White House this past week. Papandreou said he committed to Sarkozy to carrying his promises to fix Greek finances and “change” the nation. As he traveled to Paris, civil servants and unions in Athens opposed to wage and pension cuts occupied government offices for a second day, blocking access for officials seeking to determine whether the country qualifies for an international loan to avert default.
Aid ‘Assured’:
Greek Finance Minister Evangelos Venizelos continued meetings with the officials from the European Union, European Central Bank and International Monetary Fund today, a finance ministry official said. Another meeting with the so-called troika was due late Saturday to discuss final details to the 2012 budget, which is to be discussed by Cabinet in Athens Sunday, the official said.
Venizelos told To Vima newspaper in an interview published today that it is “assured” Greece will receive the next, 8 billion-euro tranche of bailout loans needed for the nation to meet debt payments for the remainder of this year.
Separately, Papandreou today welcomed news of a $1 billion investment by Qatar Holdings LLC in European Goldfields Ltd. (EGU), the London-listed company behind one of the biggest gold-mining projects in Greece.
Qatar will acquire a 10 percent stake from Ellaktor SA and will have an option to buy another 5 percent from the Greek construction company. It will also provide European Goldfields with a $600 million financing facility, Ahmad al-Sayed, the chief executive officer of Qatar Holdings told reporters in Athens.
EFSF Changes?:
European governments are moving toward enacting the permanent fund next year, a year sooner than planned, to replace the EFSF. Phasing in the permanent fund, known as the European Stability Mechanism, would provide a 500 billion-euro war chest. It also includes provisions for sharing costs with bondholders for countries with “unsustainable” debt. Additional measures now in play include reopening the second Greek rescue agreed in July to increase the financial industry’s contribution and creating a safety net for Europe’s banks. “The situation on the international financial markets is worrying,” German Finance MinisterWolfgang Schaeuble told lawmakers Sept. 30 in Berlin. He said the EFSF upgrade is “urgent.”
