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Greece: Eurozone ministers delay decision on vital loan Greece: Eurozone ministers delay decision on vital loan
(40 minutes later)
  
Eurozone finance ministers have postponed their decision on a 12bn euro ($17bn; £10bn) loan to Greece until it introduces further austerity measures.Eurozone finance ministers have postponed their decision on a 12bn euro ($17bn; £10bn) loan to Greece until it introduces further austerity measures.
The ministers said they expected to pay the latest tranche of a 110bn euro EU and IMF aid package by mid-July.The ministers said they expected to pay the latest tranche of a 110bn euro EU and IMF aid package by mid-July.
But its release depends on the Greek government surviving a vote of confidence on Tuesday.But its release depends on the Greek government surviving a vote of confidence on Tuesday.
Parliament then must also pass 28bn euros worth of new spending cuts and economic reforms.Parliament then must also pass 28bn euros worth of new spending cuts and economic reforms.
Greeks have already seen wages and pensions cut and there have been regular, mass demonstrations - even riots - in protest.Greeks have already seen wages and pensions cut and there have been regular, mass demonstrations - even riots - in protest.
The latest public opposition to the cutbacks involves Greek workers at the state-owned electricity company, who are on the first day of a 48-hour strike.The latest public opposition to the cutbacks involves Greek workers at the state-owned electricity company, who are on the first day of a 48-hour strike.
At a press conference on Monday, Jean-Claude Juncker, Luxembourg's prime minister who chairs the meetings of the 17 eurozone finance ministers, said he felt for the Greeks: "This is something that affects me greatly. You look at the reaction of the people on the streets. You see they are rebelling. I understand that and I'm touched by that."At a press conference on Monday, Jean-Claude Juncker, Luxembourg's prime minister who chairs the meetings of the 17 eurozone finance ministers, said he felt for the Greeks: "This is something that affects me greatly. You look at the reaction of the people on the streets. You see they are rebelling. I understand that and I'm touched by that."
But he also said that there was no choice but to keep to the existing plan: "There is no other choice than fiscal consolidation in Greece and in other fiscally weakened countries."
But he also said that there was no option but to keep to the existing plan: "There is no other choice than fiscal consolidation in Greece and in other fiscally weakened countries."
Eurozone finance ministers have also committed themselves to putting together a second bail-out package to keep the country afloat. The set of loans could be bigger than the first bail-out.Eurozone finance ministers have also committed themselves to putting together a second bail-out package to keep the country afloat. The set of loans could be bigger than the first bail-out.
Second rescueSecond rescue
Mr Juncker said that as long as the Greek parliament supported the new measures, he was certain Greece would get a second bail-out.Mr Juncker said that as long as the Greek parliament supported the new measures, he was certain Greece would get a second bail-out.
Stock markets and the euro fell, pressured by the lack of resolution to the Greek crisis. The Greek prime minister last week reshuffled his cabinet, including appointing a new finance minister: Evangelos Venizelos.
Leading indexes in Frankfurt, Paris and London were all down around 1% and the euro lost 0.5% against the US dollar. "There is an immediate and urgent need to regain the credibility of the country, as far as the implementation of the [rescue] programme," Mr Venizelos said.
Kathleen Brooks, research director at Forex.com, said investors were unsettled: "The markets remain nervous and are keeping the pressure on stock and credit markets, along with the euro, while a long-term credible solution to the crisis remains elusive." Stock markets and the euro fell at the start of business on Monday, pressured by the lack of resolution to the Greek crisis.
Appeal for unity Leading indexes in Frankfurt, Paris and London were all down around 1% and the euro lost 0.5% against the US dollar in early trading, but stock markets and the euro later recovered to show only minor falls.
Appeal for unity
After a seven-hour meeting in Luxembourg that ended early on Monday, the finance ministers said they would not approve the disbursement to Greece of the 12bn euros (8.7bn euros from eurozone governments and 3.3bn euros from the IMF) until the country's parliament passed the fiscal strategy and privatisation laws.After a seven-hour meeting in Luxembourg that ended early on Monday, the finance ministers said they would not approve the disbursement to Greece of the 12bn euros (8.7bn euros from eurozone governments and 3.3bn euros from the IMF) until the country's parliament passed the fiscal strategy and privatisation laws.
Athens has said it needs the 12bn euros from the existing package by July to avoid defaulting on its debt.Athens has said it needs the 12bn euros from the existing package by July to avoid defaulting on its debt.
Belgian Finance Minister Didier Reynders said: "To move to the payment of the next tranche, we need to be sure that the Greek parliament will approve the confidence vote and support the programme, so the decision will be taken at the start of the month of July," he said.Belgian Finance Minister Didier Reynders said: "To move to the payment of the next tranche, we need to be sure that the Greek parliament will approve the confidence vote and support the programme, so the decision will be taken at the start of the month of July," he said.
A statement issued by the ministers called on all political parties in Greece to: "support the programme's main objectives and key policy measures to ensure a rigorous and expeditious implementation".A statement issued by the ministers called on all political parties in Greece to: "support the programme's main objectives and key policy measures to ensure a rigorous and expeditious implementation".
"Given the length, magnitude and nature of required reforms in Greece, national unity is a prerequisite for success," it added."Given the length, magnitude and nature of required reforms in Greece, national unity is a prerequisite for success," it added.
The ministers also concluded that because Greece was unlikely to return to the commercial money markets by early 2012, a second bail-out would be needed.The ministers also concluded that because Greece was unlikely to return to the commercial money markets by early 2012, a second bail-out would be needed.
The new aid package, to be outlined by early July, will include loans from other eurozone countries.The new aid package, to be outlined by early July, will include loans from other eurozone countries.
'Roll-overs''Roll-overs'
It is also expected to feature a voluntary contribution from private investors, who will be invited to buy up new Greek bonds as old ones mature.It is also expected to feature a voluntary contribution from private investors, who will be invited to buy up new Greek bonds as old ones mature.
"Ministers agreed that the required additional funding will be financed through both official and private sources and welcome the pursuit of voluntary private sector involvement in the form of informal and voluntary roll-overs of existing Greek debt at maturity for a substantial reduction of the required year-by-year funding within the programme, while avoiding a selective default for Greece," the statement said. Mr Juncker said that money had to be freely given - or it would be seen as a technical default on debt repayments: "It is absolutely clear that no pressure will be put on the financial institutions, so as to avoid a Greek selective default. Voluntary means voluntary."
Officials said the plan was expected to fund Greece into late 2014 and total about 120bn euros. But political pressure is being applied to the commercial banks, with Germany in particular keen to see them share the burden.
The agreement came after the eurozone ministers held a conference call with other members of the G7 group of rich industrialised nations. A finance policy expert from German Chancellor Angela Merkel's party called for the government to ensure that private creditors participate as much as possible in a second Greek aid package.
Klaus-Peter Flosbach, spokesman for the Conservatives in parliament, said: "The coalition agreed to only approve financial help for Greece if there is an appropriate involvement by private creditors and we are sticking to that."
Officials said the new plan was expected to fund Greece into late 2014 and total about 120bn euros.
The European Commission has also confirmed that inspectors from the European Union and International Monetary Fund will visit Athens on Tuesday.The European Commission has also confirmed that inspectors from the European Union and International Monetary Fund will visit Athens on Tuesday.
"They will be here Tuesday and Wednesday at least," said Carlos Martin Ruiz de Gordejuela, press officer for the European Commission representation to Greece."They will be here Tuesday and Wednesday at least," said Carlos Martin Ruiz de Gordejuela, press officer for the European Commission representation to Greece.
Mr Ruiz de Gordejuela said that it would be a "technical mission" adding that the composition of the mission had not been decided and he could not say what its objective would be.Mr Ruiz de Gordejuela said that it would be a "technical mission" adding that the composition of the mission had not been decided and he could not say what its objective would be.