European Leaders Poised to Adopt Second Greek Bailout

Posted July 21st, 2011 at 4:00 pm (UTC-5)
Leave a comment

European leaders have adopted another package of measures aimed at preventing Greece from defaulting on its huge public debt and stabilizing the common European currency.

The European Union and the International Monetary Fund said Thursday they will give Greece a second bailout worth about $155 billion.

Officials from the continent's 17 nations that use the euro met in Brussels Thursday. After the meeting, European Union President van Rompuy and European Commission President Jose Manuel Barroso said participants unanimously supported a package they called a Marshall Plan for Greece to ensure the sustainability of its debt and prevent the crisis.

Greek Prime Minister Georgios Papandreou hailed the package as a solution that's good for the Greek people as well as for businesses.

In the last year, Greece — and later, Ireland and Portugal — were forced to secure international financial assistance from their European neighbors and the International Monetary Fund. But Greece, even after adopting austerity measures to cut spending and raise taxes, says it needs another bailout of about the same size as last year's $156 billion figure.

The continent's officials, including Eurogroup President Jean-Claude Juncker and others, earlier said Greece may incur what they called a “selective default” on their current obligations.

That could mean that Greece might miss a payment to bond holders on some loans while continuing to make payments on others. Or it could exchange old debt for new loans on terms that would leave creditors worse off.

Hours before the summit started, the leaders of France and Germany, Europe's two largest economies, reached an agreement on helping Athens. French President Nicolas Sarkozy met with German Chancellor Angela Merkel in Berlin before they headed to Brussels.