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Harsh rescue terms may not save Greece

July 4, 2011 at 10:41 AM   |   Comments

BRUSSELS, July 4 (UPI) -- Greece will sacrifice much of its sovereignty by accepting a European bailout and still risks default, officials warned Monday.

Euro-zone finance ministers saved the Greeks from immediate default over the weekend by approving 8.7 billion euros ($12.6 billion) in aid.

"The sovereignty of Greece will be massively limited," Luxembourg Prime Minister Jean-Claude Juncker told the German magazine Focus in an interview published Sunday.

"For the upcoming wave of privatization they need a solution modeled on the German Treuhandel," he said, referring to the agency that sold off East German state firms after reunification, the EUObserver reported.

Greece's agreement to sell off 50 billion euros ($72.6 billion) in state assets by 2015 has aroused fierce popular opposition.

A second stage of the rescue, proposed by France, "could require private-sector debt restructuring in a form that we would view as an effective default," the rating agency Standard & Poor's said in a statement Monday reported by The New York Times.

President Nicolas Sarkozy says French banks have agreed to reinvest most proceeds of their holdings of Greek debt maturing until 2014 back into new long-term Greek securities.

S&P also cut its long-term rating on Greece three more steps, from B to CCC.

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