Safety net

Eurogroup chief Jean-Claude Juncker on Tuesday threw his weight behind a proposal by French President Nicolas Sarkozy to set aside bailout funds for Greece in a special account to cover interest payments on its massive debts.

Luxemburg's Prime Minister told German public broadcaster RBB Inforadio that the suggestion, which was first brought up on Monday during a meeting between Nicolas Sarkozy and German chancellor Angela Merkel, was worthy of consideration.

"As always, the devil is in the details, but the idea to try to ensure that our Greek friends also pay back their debts by means of a special account is not an absurd one," Juncker argued.

The French President had floated the idea of an escrow account into which part of the bailout funds for Greece should be funneled specifically and only to service interest on Greek debt amid ongoing uncertainty over the Greek banks' ability to cut its own debt.

Calming down creditors

Sarkozy's proposal, which was backed by the German chancellor, could help conclude a deal with private creditors on cutting 100 billion euros ($130 billion) off Greece's debt sheet. However, Athens has been very sensitive to any attempts to infringe on its financial sovereignty.

Jean-Claude Juncker on Tuesday reiterated his warning towards Greece that the country would not receive more bailout funds without additional austerity measures. He said Athens would not be able to pay back its debt as of March, should extra savings measured not be agreed on swiftly.

"This is not a threat – it simply is a description of realities," Juncker said. He expressed his conviction that the euro would survive the current financial turmoil.

Author: Hardy Graupner (AFP, Reuters)
Editor: Kristin Zeier