What help for Greece?
Europe's leaders are split over what aid to give Greece, a subject that, while not on the agenda, will likely dominate the EU summit in Brussels.
Last modified: 25 Mar 2010 13:49
The next two days are extremely important for the European Union, and more particularly for the 16 member states that use the euro as their currency.
Some say it's the worst crisis in years. For the EU, that's quite a claim.
EU leaders meet here in Brussels. Greece and it's massive debt problem may not officially be on the agenda but it will dominate discussions.
The first thing to say is that Greece hasn't asked for a financial bailout. It's made punishing cuts in its budget which has brought protests onto the streets, but has also convinced the financial markets it's on target to get its spending under control.
In the next couple of months, it has to refinance billions of dollars of the debt. It would normally do this by selling it off on the markets as a Government bond, a promise to repay in 10 years. But there's interest to pay on such a transaction.
The current rate is around 6.5 per cent, way more than France or Germany would be asked to pay. That's because Greece is a bigger risk, and such a high rate simply adds to the financial problems.
So the Greeks want the 16 eurozone countries to agree a financial safety net. They warn that no deal means they'll have to go the the International Monetary Fund (IMF) for help, which would undermine the euro, which has already hit a ten month low against the dollar.
Any bailout has to be agreed by Europe's biggest economy, Germany. And Chancellor Angela Merkel knows the German people don't want their hard earned cash to be used to bail out a country largely regarded as feckless, reckless and arguably corrupt.
Other countries see the need for a bailout, which leaves Merkel isolated but her financial muscle makes her strong.
She may eventually come to the Greek's aid, but before she does she wants the rules for entering and participating in the euro radically re-written. Typically for Europe that'll involve lengthy, messy and possibly acrimonious negotiations, and it may mean that any other countries repeating Greek mistakes will be booted out of the euro project.
It's unlikely the EU won't step in to help Greece but it probably won't be in the next two days and it won't be without a price.