Top euro policymakers at odds over Greek debt fix

Thu Nov 15, 2012 9:24am EST
 

By Jussi Rosendahl and Philip Blenkinsop

HELSINKI/BRUSSELS (Reuters) - The European Union's top economic official sought to rule out any write-off of Greece's debt to governments on Thursday after a European Central Bank policymaker said for the first time that a "haircut" on part of it was probable.

A row between euro zone governments and the International Monetary Fund over how to make Greece's giant debt mountain manageable is holding up the release of 31 billion euros ($39.5 billion) in emergency loans needed to keep Athens afloat.

IMF officials have argued privately that some writedown for euro zone governments is necessary to make Greece solvent but Germany, the biggest contributor to the bloc's bailout funds, has repeatedly rejected the idea of taking a loss on holdings of Greek debt, saying it would be illegal.

EU Economic and Monetary Affairs Commissioner Olli Rehn told reporters in Helsinki: "The solution will be a combination of various elements, one is not enough.

"But it is essential that the principal not be touched. There is a strict unanimity on this within the euro zone."

Rehn's comment contradicted ECB Governing Council member Luc Coene, who was quoted by a Belgian daily as saying that a partial writedown of Greek debt was likely to happen eventually.

De Standaard said Coene made the comments in a debate with students at Ghent University on Wednesday. He was also quoted as saying Spain should urgently seek a bailout.

Asked whether the Belgian central bank chief had been reflecting a growing view in the ECB that an official sector "haircut" on Greek debt was inevitable or speaking for himself, a senior ECB source said Coene had expressed his personal view.   Continued...

 
European Economic and Monetary Affairs Commissioner Olli Rehn addresses a news conference at the EU Commission headquarters in Brussels November 14, 2012. REUTERS/Francois Lenoir