Eurozone leaders battle to secure Greek deal

The Telegraph ^ | 2/20/2012 | Louise Armitstead, and Bruno Waterfield, in Brussels

[bruinbirdman]

European powers struggled to agree a Greek rescue deal on Monday night as politicians doggedly refused to either lower Athens' debt targets or boost the €130bn (£108bn) bail-out fund.

Members of the eurogroup promised a deal would be done but the talks ran into the night in a tug-of-war battle over the yawning gap in Greece's finances.

There were violent protests in Athens as Greek democracy and sovereignty appeared to be being carved up by demands from individual European countries.

Northern European "hardliners" - including Holland, Germany, Austria and Finland - demanded a "permanent representation" of the troika in Athens so that officials from the European Union, the European Central Bank (ECB) and International Monetary Fund (IMF) can run Greek finances.

Dutch finance minister Jan Kees De Jager said: "I'm in favour of more control, more supervision, a more permanent presence of the troika, as well as a kind of escrow mechanism, in order to establish more control in Athens of the money itself."

They also called for the bail-out funds, which are needed to avert a Greek default on March 20, to be placed in an escrow account out of Athens' reach to ensure interest payments take priority over government spending services. Greece pleaded to retain control of its finances, even offering to introduce a new law giving interest payments priority.

On Monday night eurozone officials admitted there was shortfall in funds with the Greek debt ratio hovering at around 124pc, four points above the IMF target. IMF has insisted the second bail-out must aim to reduce Greek debt to 120pc of GDP by 2020, a target that has slipped by 9pc in just four months as the economy has plunged. Without IMF involvement, eurozone members will have to pay more, which is politically impossible for many.

On Monday