Sticking points

The 17 eurozone finance ministers left crisis talks Tuesday with no deal on how to help keep Greece from defaulting on its burdensome debt.

After six and a half hours in Brussels, the ministers set up another meeting for Sunday evening in Luxembourg, just before scheduled talks on Monday.

Luxembourg's Finance Minister Luc Frieden gave a positive spin to the meeting, saying the eurozone only needed more time to come up with a compromise, and that "the goal is really to have a solution by the end of this month."

"Every time that we meet together, we come closer to a solution," he told reporters after the meeting. "I'm not sure that we'll find a solution next week, but within the next two weeks."

Private investment

Greece's faltering economy and the decreasing public confidence in its ability to make good on government bonds have convinced the EU that Greece will soon need a second package of emergency loans - on top of the 110 billion euros the EU and International Monetary Fund agreed to loan Greece last year.

But the details of where the money will come from have split EU member states and institutions. Germany and the Netherlands have been among the most insistent that private lenders put up some of the money.

The European Central Bank, the European Commission and France have insisted that any private involvement must be purely voluntary, meaning taxpayer-funded incentives would most likely be necessary.

"We have to be very careful that this is not considered to be a 'credit event', to be very careful that this does not lead to a rating downgrade," Frieden said. "It's only under these strict limitations that we can move towards private sector involvement."

Rating downgrade

The meeting in Brussels came a day after ratings agency Standard & Poor's downgraded Greek government bonds three levels to CCC - meaning the country is "currently vulnerable and dependent on favorable economic conditions to meet its commitments."

The move angered the Greek Finance Ministry, which said S&P was ignoring the government's austerity and privatization efforts and its collaboration with the EU and IMF on new loans.

Exacerbating Greece's predicament is a growing division among members of the ruling Socialist party on the austerity measures.

A Socialist lawmaker defected from the party on Tuesday in protest at the draconian spending cuts, reducing Prime Minister George Papandreou's majority to 155 seats out of 300. News agency ANA said the lawmaker, Georges Lianis, wrote in a letter to Papandreou that his decision was due to a "problem of conscience."

Other Socialist members of parliament have shown skepticism about the continuation of the austerity program, saying it has failed to achieve its goal of bringing the country out of recession and has increased social injustice.

Author: Andrew Bowen (AFP, Reuters, dpa)
Editor: Michael Lawton