Greece: eurozone leaders will hold a summit to agree bailout program

Eurozone leaders to hold bailout talks

BRUSSELS — Eurozone nations will hold an emergency summit Thursday to agree a joint eurozone and International Monetary Fund bailout program for Greece aimed at ending months of market turmoil, a Greek official said.

Greek government spokesman Giorgos Petalotis said “there is a draft decision which we consider covers us completely and which we expect to be ratified at 1830 GMT (7:30 p.m.).”

Two diplomats speaking on condition of anonymity say Germany and France — the two largest nations that use the euro — want to make some euro22 billion in loans available to Greece only as a last resort if it can’t borrow money from financial markets.

The European Central Bank’s president Jean-Claude Trichet also backs the plan, which could also be used to help out other financially troubled members of Europe’s currency union, one said.

Part of a draft text seen by the Associated Press said the 16 eurozone nations would take on the lion’s share of any bailout. It would have “substantial International Monetary Fund financing and majority European financing,” the document said.

European and U.S. stock markets spiked higher Thursday on news that a financial rescue package for Greece was taking shape. Market worries over Europe’s slow moves to set up a safety net for eurozone members who can’t pay their bills has sent the euro sliding to a 10-month low.

A diplomat said the agreement “precisely describes the conditions in which the euro member states intervene” and “goes well beyond Greece.”

Spanish officials quoted Prime Minister Jose Luis Rodriguez Zapatero saying Spain was ready to contribute some euro2 billion to the loan package.

They were speaking on condition of anonymity because details have not been agreed by all 16 nations that use the euro.

German Chancellor Angela Merkel won her demand that any aid only come when Greece has exhausted all other options to pay its debts. It needs to borrow some euro54 billion this year and must refinance some euro20 billion in April and May. It complains current rates are too high.

She told the German parliament that a financial rescue could be justified in an “exceptional emergency” when Greece was unable to borrow from bond markets and the stability of Europe’s currency union was at risk.

She also insisted on IMF involvement. France yielded to that, dropping previous opposition to calling in the IMF to help the eurozone handle its problems.

Germany sees itself as a fierce defender of prudent budget spending and is unwilling to use its taxpayer money to help Greece, which overspent and faked budget figures for years. Merkel also faces a key regional election May 9 which could damage her center-right government by overturning its majority in Germany’s upper house of parliament.

The Washington, D.C.-based international lending agency has already bailed out three European Union members — Hungary, Romania and Latvia — but none use the euro.

The eurozone meeting would ask Van Rompuy to draw up detailed plans “before year end to show all the options possible” for bailing out eurozone nations in future. That would include preventive measures and sanctions, a diplomat said.

Merkel said eurozone nations need to learn the right lessons from the financial crisis and toughen sanctions against countries that run budget deficits above the EU limit of 3 percent of gross domestic product. She said it would be “disastrous” to abandon these rules.

“There must be an end to cheaters,” she said.

A eurozone summit on Thursday would be only the second time that leaders from the currency zone met separately. They last held talks to decide how to shore up their banking sector during the peak of the financial crisis in October 2008.

Associated Press writers Raf Casert, Elena Becatoros, Debbie Seward, Gretchen Mahan and Robert Wielaard in Brussels, Kirsten Grieshaber in Berlin and Carlo Piovano in London contributed to this story.

(This version CORRECTS Corrects lede to indicate that the Greek official was speaking about the plan for Greece only. UPDATES 4th graf to show plan could be used to help other troubled countries. Moving on general news and financial services.)