Elusive Greek bailout near

Before a crunch meeting of eurozone finance ministers on Monday, caretaker Prime Minister Lucas Papademos talked to fellow eurozone leaders to persuade Berlin and others to back bailout measures needed to stave off bankruptcy.

German Chancellor Angela Merkel, Italy’s Mario Monti and Papademos all expressed optimism over an accord during a three-way conference call, Monti’s office said in a statement.

The Greek premier also spoke to Dutch Prime Minister Mark Rutte and state television said he would pursue talks with eurozone partners “to create a positive mood in view of Monday’s meeting and to dispel doubts that could thwart this agreement”.

Mutual accusations of brinkmanship between Athens and other euro capitals have soured the atmosphere and strained ties within the single currency union as it faces its toughest challenge since euro notes and coins were introduced in 2002.

Negotiations were put back on track on Thursday when Athens set out the remaining cuts in a €3.3 billion austerity package whose passage through parliament triggered rioting and looting through central Athens last Sunday.

But there are still question marks over whether Greece has done enough to ease the crisis and bring its debt mountain down from 160 per cent of national output to the still daunting 120 per cent by 2020 agreed with partners and lenders last year.

“The scepticism is especially strong among the AAA states over whether Greece will be able to make it,” Germany’s Der Spiegel magazine quoted Austrian Finance Minister Maria Fekter as saying of countries with top-notch credit ratings such as Germany, Finland and the Netherlands. “The risk of a Greek insolvency is not off the table.”

According to an assessment by the European Commission, the ECB and the IMF, Greek debt will still be around 129 per cent of GDP in 2020 — higher even than the 125 per cent that most eurozone states would probably accept.

Earlier, Greece won a public expression of moral support as French Prime Minister Francois Fillon cautioned Europe that it should not “play with the default of Greece”.

“The Greeks have promised very important reforms,” he told RTL radio. “The Europeans now have to keep their commitments.”

Asked if there was a difference of opinion within Germany, Fillon said: “There is no divergence with the Chancellor, who absolutely shares our positions, but we hear people sometimes in Germany express difference opinions... within the German government.”— Reuters