Up to €25bn aid for Greece mooted

The countries using the euro currency will together provide aid worth between €20 billion (Dh99.9bn) and €25bn for Greece, according to Germany's Finance Ministry, a magazine reported yesterday.

Citing "initial considerations" by the ministry, German weekly Der Spiegel said the share of financial aid for Greece would be calculated according to the proportion of capital each country holds in the European Central Bank. A spokesman for the German finance ministry said he would not comment on the report, which stated that the financial assistance should take the form of loans and guarantees. The report said all euro countries would shoulder the burden and that Germany's share in the package would amount to €4bn or €5bn and be handled by state-owned bank KfW.

According to the German planning, the aid should be tied to strict conditions, the magazine said, adding that loan tranches should only be paid out once these are met.

Chancellor Angela Merkel's government has so far resolutely deflected appeals to promise Greece aid despite fears that failure to help Athens could threaten the euro. In public, Germany argues that leniency would take pressure off Athens and other euro zone debtors to cut their budget deficits.

A senior financial official in the ruling coalition said Germany was considering using the KfW to buy Greek government bonds. A separate proposal saw the KfW issuing guarantees to German banks that bought the Greek bonds.

Separately, Der Spiegel said an internal report by Germany's financial market watchdog BaFin concluded German banks could be seriously threatened if Greece or other countries, including Spain, Portugal and Italy become insolvent.

Geek bond sale

Two Greek newspapers said the country's EYP intelligence service, investigating speculative attacks on Greece in money markets, had identified US and British firms as aggressive sellers of Greek bonds.

The finance ministry said it would not confirm the reports, neither of which alleged that laws were broken. A government spokesman said EYP had not been asked to undertake such a probe. "There is no such action, no such decision. Beyond that we are trying to determine where these speculative games originate," government spokesman George Petalotis told reporters.

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