Greece’s ‘dangerous flashpoint’

The European Union must act quickly to find a solution to the "dangerous flash point" in Greece, Italian Prime Minister Mario Monti said Monday, as negotiations on a new Greek debt rescue continued.

Rome has pushed Europe to find "a solution to the first, the main, the most dangerous flash point that is Greece," Monti told members of the Italian financial community at a meeting at Milan's Stock Exchange.

"Lately, a growing number of Eurozone member states have been increasingly convinced that it would be serious (should) ... Greece show further signs of difficulty," he said. Italy will not need any more austerity budget cuts even if its current recession lasts, Monti told Italian finance chiefs In Milan.

The premier, who has called on Europe several times to balance austerity with growth, said a group of European countries, including Italy but excluding France and Germany, were sending Brussels a letter pushing for growth.

"The letter from seven or eight countries from the European Union, and not just from the Eurozone, will be made public today, if it has not already been."

The letter comes "in light of the European Council (meeting) on March 1, to push, with concrete and working indications, for European economic growth," he said.

"Barring last minute changes, France and Germany will not be among the signatories," he added, without specifying which countries were taking part.
Meanwhile in Brussels Eurozone finance ministers met on Greek debt, seeming to tighten the corset of conditions tightly enough to approve a massive rescue and avert imminent default. Greece has met all the conditions for a debt rescue and expects to win approval but negotiations on detail continue to the last minute, the Greek finance minister said.

US Treasury Secretary Timothy Geithner threw US support behind the new austerity measures agreed by Greece and said the US backed the idea of a new International Monetary Fund loan for Athens.

Also French Finance Minister Francois Baroin said EU ministers had everything they needed to approve a second financial rescue package for Greece. Austrian Finance Minister Maria Fekter said she was in favour of a special account being created to ensure that Greece repays its debts ahead of talks in Brussels on a new bailout to avert default.

One of the main sticking points is over setting aside some of the aid so that it can only be used for reducing Greek debt. While there is "political agreement" over such a fund, its "technical form" is still under debate.

click to enlarge DEFENDING GREEK AUSTERITY: Riot policemen are attacked with flares during clashes in front of the Greek parliament in central Athens, on Sunday, February 19. Greek Prime Minister Lucas Papademos unexpectedly headed to Brussels on Sunday, a day ahead of a crucial Eurozone finance ministers’ meeting to discuss a 130 billion Euro (N$1,3 billion) bailout necessary to keep Greece from going bankrupt © NAMPA/AP