Eurozone Ministers Close To Greek Bailout Deal

Host Audie Cornish talks with Eric Westervelt about the decision on whether to grant Greece another bailout, this time worth $171 billion.

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AUDIE CORNISH, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Audie Cornish.

And we begin this hour with $171 billion. That's the size of a second rescue package for debt-troubled Greece being negotiated today by European finance ministers meeting in Brussels. They hope the bailout will, finally, ease the economic crisis that's pushed the group of nations that uses the euro to the breaking point. But there are still outstanding issues to resolve and Greece faces huge obstacles, even with the bailout, before it can return to fiscal health.

Joining us now from Brussels is NPR's Eric Westervelt. And, Eric, before the European Union and its partners dole out that $171 billion worth of new aid, I understand they want additional assurances from Greece. What are they looking for?

ERIC WESTERVELT, BYLINE: Well, Audie, finance ministers meeting here tonight, they want more control over how Greece spends this money. I mean, one option I'm told is to set up a kind of escrow account which would try to assure that Greece prioritizes servicing its debt before it pays for any basic budget items and government services. You know, this would be one way to keep the pressure on Greece after they get the money to make, you know, good on reforms and stick with these really tough and painful austerity plans.

In the past, Audie, Greek politicians have complained that that kind of mechanism is unacceptable, that it's an infringement on their fiscal sovereignty. But I think as the crisis has deepened and Greece has failed repeatedly to meet many of the goals of the first bailout, you know, there's now a sense in Greece and the rest of Europe that this the reality and this kind of oversight by the EU and its other creditors may have to be done.

CORNISH: And then there's the issue of whether the numbers really add up here. I mean, what are the biggest concerns there?

WESTERVELT: Well, they really want to get Greece's debt down to a manageable level in the long term, so it can really start to expand and grow the economy and go back to the bond market and borrow on reasonable, sustainable terms. But some number crunching being done by the EU shows that even with this second massive bailout and unprecedented, you know, austerity measures and cost-cutting moves, Greece's debt would still be unsustainably high by 2020.

One possibility, I'm told, is to reduce the interest rate Greece is going to pay on its first bailout. Another is to have private bond holders take an even bigger loss on Greek bonds. As part of this bailout, private creditors will trade their old Greek bonds for new ones and take a big hit, almost 70 percent loss, but with some favorable terms thrown in. So, it's thought that getting private bond holders to take an even bigger loss, or haircut, will be one way to try to close that gap I mentioned. But that's going to be a tough sell as bond holders are already taking a huge loss.

CORNISH: And lastly, Eric, is there any sense or fear that this is too little, too late? I mean, this is the second massive cash infusion for Greece in as many years.

WESTERVELT: Yeah. I mean, the big question is, you know, will Greece stick with the austerity measures, you know, in the wake of street protests and even after elections? And then, the bigger issue is, you know, will Greece's chronic lack of growth undermine the whole thing? Do the numbers add up? I mean, all the emphasis, Audie, has been on austerity, on cuts. Will Greece be able to do anything to foster and encourage growth?

There's concern the hole is now sort of too deep, that Greece's economy is in such bad shape. I mean, it contracted 7 percent last quarter. Unemployment is at 21 percent. You know, it's going to be very, very hard for Greece to, you know, implement these cost-cutting measures and try to help the economy expand and grow.

CORNISH: That's NPR's Eric Westervelt in Brussels. Eric, thank you so much.

WESTERVELT: Thank you, Audie.

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