Euro zone wrestles over emergency financing for Greece

BRUSSELS - Euro zone finance officials were struggling on Tuesday to find a way of keeping Greece from defaulting on debt repayments to the ECB next week, with up to six options on the table but none that is problem-free.

Greece needs 3.5 billion euros (S$5.25 billion) by Monday to redeem its maturing credit from the European Central Bank. Before this is paid, however, Athens has to settle an overdue payment to the International Monetary Fund of more than 2 billion euros.

Overall, Greece needs 7 billion euros in July and another 5 billion by mid-August, its official creditors estimate.

"It's full of traps and snares," the chairman of euro zone finance ministers Jeroen Dijsselbloem said on entering talks of the European Union's 28 finance ministers. "We're looking at all the instruments and funds that we could use and all of them seem to have disadvantages or impossibilities or legal objections so we're still working on it," he said.

Experts have come up with six options for such bridge financing, Finnish Finance Minister Alexander Stubb said, until Greece negotiates a full third bailout of 86 billion euros about five weeks from now.

Euro zone deputy finance ministers, meeting in what is called the Euro Working Group, will discuss the options on Tuesday before making a recommendation that could be approved in a conference call of the finance ministers themselves later on Tuesday or on Wednesday.

The options include bilateral loans to Greece, the disbursement of profits made by the ECB on Greek bonds it bought during the crisis, and making use of the funds still available in a mini-bailout fund set up in 2010 - the European Financial Stability Mechanism (EFSM).

The last option, however, seemed the most problematic. To deploy any of the 13.2 billion euros remaining in the EFSM, all 28 EU governments would have to give their consent, because the fund is backed by the whole EU budget.

Britain, which refused to allow the EFSM fund to be used for Greece's bailout in the past, restated its objections on Tuesday, calling the option a complete "non-starter".

"The euro zone needs to foot its own bill," British Chancellor of the Exchequer George Osborne said.

EU officials had already made clear this week that they did not expect Britain to contribute to Greece and that Brussels would not press it to. That is not least because the EU executive is trying to avoid fuelling Eurosceptic sentiment in the bloc's second-biggest economy before a referendum that Prime Minister David Cameron has called on EU membership by 2017.

Britain is not alone in its refusal to help. Prague expressed a similar unwillingness to contribute. "The Czech Republic will not give any loan to Greece, nor does it want to guarantee any loans for Greece," Czech Finance Minister Andrej Babis said.

"The decision of the euro zone is a political one. Anybody who can count will realise that Greece cannot manage this, no matter how hard it tries, because even Prime Minister (Alexis) Tsipras wanted a 30 percent reduction of the debt," Babis said. "I think (the euro zone's) decision is wrong.

The best thing for Greece would be to leave the euro zone and to have some of its debt erased. I think (the Greek debt) will return to the agenda after some time," he said.