Arab Today, arab today hopes rise for greek deal as us praises euro salvage bid
Last Updated : GMT 21:09:51
Arab Today, arab today
Arab Today, arab today

Hopes rise for Greek deal as US praises euro salvage bid

Arab Today, arab today

Arab Today, arab today Hopes rise for Greek deal as US praises euro salvage bid

Davos - AFP

Europe\'s economic pointman said Friday he expected Greece to agree a deal with private creditors to write down its debt this weekend as the US praised efforts to combat the eurozone crisis. Speaking at the Davos forum, EU economic affairs commissioner Olli Rehn said the Greek debt agreement may be hammered out before a gathering of European Union leaders Monday, in what would be a major shot in the arm to the summit. \"We\'re very close,\" he told the World Economic Forum in Davos. \"They\'re about to close a deal, if not today maybe over the weekend, preferably in January rather than February.\" As he spoke in Switzerland, the Greek government in Athens was in talks with private creditors on a voluntary exchange of bonds that would wipe 100 billion euros ($130 billion) off the country\'s debt of 350 billion euros. The deal under discussion would see private creditors take a \"haircut\" of at least 50 percent on 200 billion euros in debt. Previous talks stalled over the amount of interest to be paid on the remaining debt. Any failure to strike a deal could trigger a messy default, which would be an economic disaster for Greece itself and a threat to banks holding too much sovereign debt while piling pressure on other eurozone states. Rehn said Greece would remain a special case and that the private lenders would not be required to take losses on any other eurozone country\'s debt, thanks to plans for a better eurozone financial safety net. \"While I know more or less how the eurozone will look in the next three years, I know that next three days will be very crucial,\" he said. \"We need a very sustainable solution for Greece, even if Greece is a special case,\" he told the audience of business leaders and top politicians. \"Private sector involvement will not be applied to any other country of the EU.\" Speaking at the same debate, German Finance Minister Wolfgang Schaeuble said he expected Greece to avoid a default but he warned its debt level should not exceed 120 percent of GDP. \"We don\'t expect a default of Greece,\" he said. \"I know that most participants have for a long time, but I don\'t expect a default from Greece. I\'m sure that everybody is ready to deliver what has been agreed.\" The head of Germany\'s top bank, Deutsche Bank, also said he was confident a solution could be found to Greece\'s woes. Josef Ackermann said the \"haircut\", or losses that banks were being asked to take on their holdings of Greek debt, was \"almost 70 percent.\" \"That is a great, great deal. But everyone has to make their contribution and then we will see where we are. We\'re going to carry on,\" he told Germany\'s NTV. Speaking the day after the Federal Reserve cited the eurozone crisis as a reason for cutting its growth forecast, US Treasury Secretary Timothy Geithner said there were signs a corner was being turned. \"Europe is making some progress,\" he told delegates. \"Over last two months in part they are laying foundations for more credible framework.\" \"We have three new governments (Italy, Greece, Spain) doing some very tough things, an ECB doing the things you have got to do.\" The annual forum has been marked by gloom about the state of the global economy, and in particular about Europe\'s struggle to cope with yawning public deficits while at the same time seeking growth and jobs. The euro has been under pressure -- amid fears that Greece or even eventually a giant like Spain or Italy could default on its debts -- and the 17-nation bloc\'s economy in on the brink of renewed recession. Davos has reverberated with calls for eurozone nations to act decisively to restore confidence, with Mexican President Felipe Calderon calling on Europe to \"bring out the bazooka immediately\" to prevent the problem from sinking Italy and Spain. Geithner said Europe needs a \"stronger and more credible firewall\" and hinted that the US and emerging economies could supply the International Monetary Fund with more funding to help the eurozone rescue effort. \"If Europe is able to do that, we believe that the IMF can play a substantive role. It can\'t be a substitute for a European response,\" he said. Further fuelling the mood of optimism, Italy successfully passed another market test by selling 11 billion euros ($14.5 billion) in short term bonds at sharply lower rates.  

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