Support is building among senior European finance officials for a plan to press Greece's private-sector creditors into accepting a debt exchange that would result in delayed repayment to them, people familiar with the matter say.
But that aggressive course of action—which would probably trigger the euro zone's first-ever debt default—faces opposition from the European Central Bank, which would have to be a key player in the plan, and it will face tough battles at a series of meetings of politicians this month.
The latest plan was discussed at a meeting of euro-zone finance-ministry officials in Vienna last week, and senior euro-zone officials said Saturday that there was a tentative agreement to give Greece more financing—and that aid would likely come on condition that private-sector creditors bear some of the burden.
The Vienna meeting gathered the top civil servants in European finance ministries. They are central behind-the-scenes players, but it is their bosses and European leaders who will fight the political battles and make the final call.
The governments have concluded that Greece, propped up last year with a €110 billion ($161 billion) loan package, will need more cash as soon as next spring. The debt-exchange proposal, championed by Germany and with the strong support of several other euro-zone nations, would ease Greece's cash crunch—and also lessen the amount of extra money Germany and others must quickly put up, senior euro-zone officials say.
Under the plan proposed in Vienna, the 17 euro-zone governments would ask Greece's creditors to exchange their soon-to-mature debt for debt with a longer maturity, a process that could begin as early as July if finance ministers approve the new Greek aid package at their meeting June 20, officials said.
By MATTHEW DALTON
WSJ, 6 June
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