The head of the EU executive insisted today that euro zone backers must do everything to avoid a Greek debt default, suggesting governments should be ready to dig deep again for Athens.
"If our Greek friends do their bit, we must support them," said European Commission chief Jose Manuel Barroso, arguing that a default would spell a "major problem" not only for Greece but for the euro zone as a whole.
Barroso was speaking after talks with Belgian Prime Minister Elio Di Rupo and ahead of an EU leaders summit in Brussels on Monday, by which time officials hope to have secured a writedown of Greek debt held by private investors.
As international inspectors re-do the Greek government books in Athens, sources said that euro zone governments may need to stump up another €11 billion in loans to make up for an estimated shortfall in meeting a key debt reduction target over the rest of the decade.
Barroso said he would not comment on "precise figures" but said feedback from the mission of the European Commission, European Central Bank and IMF in Athens gave grounds for optimism that a solution can be found soon.
If EU governments were unwilling to boost the scale of loans, "that would make things very difficult, not only for Greece but also for the euro zone if there was a major problem, a problem of default in Greece," he added.
"That's our line, the Commission will hold to this line, no ambiguity. "We will do our utmost to guarantee the conditions, provided the Greeks play their part, for the sustainability" of Greece's public finances, he added.
A second Greek bailout initially agreed in October was to be for €130 billion of public money, dependent on Greece's private creditors accepting losses worth €100 billion.
The International Monetary Fund wants a deal cutting the country's public debt to 120% of gross domestic product by 2020.
But a source close to the talks said that Greece's debts would likely not fall below 130%, given the way the bank talks are playing out. Splitting the difference, the source said, the tab to be shared by euro zone partners would come in at around €11 billion.
Governments, though, are publicly very wary of throwing more taxpayer money at Athens. In Brussels also for talks with EU counterparts on the EU budget for the long term, German Foreign Minister Guido Westerwelle declared his opposition.
"I see no interest in speaking every week about new funds," he said, at a time when "we don't know if promised reforms will really be implemented." "You cannot overcome a crisis by making it easier to run up new debts," he added.
Meanwhile, German Finance Minister Wolfgang Schaeuble said he expected Greece to avoid a default but he warned its debt level should not exceed 120% of GDP.
"We don't expect a default of Greece," he said. "I know that most participants have for a long time, but I don't expect a default from Greece. I'm sure that everybody is ready to deliver what has been agreed."
The head of Germany's top bank, Deutsche Bank, also said he was confident a solution could be found to Greece's woes. Josef Ackermann said the "haircut", or losses that banks were being asked to take on their holdings of Greek debt, was "almost 70%."
