Fears Of A Eurozone Split As Greece Plumbs New Depths In Debt Crisis, Huffington Post UK, by Michael Rundle, 28th sept. 2011
Concerns are growing of split in the eurozone over the terms of Greece’s second 190 billion euro (£166 billion) bailout, as the president of the European Commission warned that the EU faces its “greatest challenge” over the spiralling debt crisis.
Up to seven of the eurozone’s 17 members are reported to be unhappy with the current bailout deal for Greece, and are arguing in private for creditors to accept a bigger write down on their Greek bond holdings.
The split has emerged due to concerns that the situation regarding Greece’s sovereign debt is even more dire than previously thought.
German and Dutch officials are said to be leading the push for the private sector to take on more of the losses. France and the European Central Bank are said to be opposing the move.
Jose Manuel Barroso, the head of the European Commission, told MEPs on Wednesday that the EU now faces its “greatest challenge”, but remains confident that Greece will stay in the eurozone.
“This is not a sprint but a marathon,” he said in his annual State of the Union address in Strasboug.
He also proposed a tax on financial transactions and eurobonds while urging members to consider an even closer economic union.
Chancellor George Osborne has previously said he opposes the tax, arguing that it would simply cause foreign exchange markets to move overseas.
Meanwhile there have been renewed protests in Athens after politicians agreed to impose an unpopular new property tax via electricity bills.
Up to 1,000 demonstrators protested on Syntagma Square as police fired tear gas to break up the crowds.
The tax, which would levy 16 euros per square metre of property, will affect around 70 per cent of the Greek population who own their own homes. By attaching the tax to the electricity bill, those who refuse to pay run the risk of having their electricity service turned off.
The move is designed to plug the near 2 billion euro budget gap between revenue and debt.