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Eurozone ‘may allow’ selective Greek debt default

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Eurozone finance ministers are open to the possibility of allowing a selective debt default in Greece within a new rescue plan for the country, the Dutch finance minister said Tuesday.

“It’s not excluded anymore, clearly,” Jan Kees de Jager said on arriving for talks with European Union counterparts, one day after eurozone ministers issued a statement vowing to ensure the stability of the single currency area.

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Eurozone ministers are scrambling to put together a new bailout for Greece that would involve the private sector, but they have been divided over whether they should exclude the possibility of allowing a partial default.

“We have managed to break the knot, a very difficult knot of a contradictory statement on the one hand… saying that you want substantial private sector involvement and on the other hand you have at all times to avoid a selective default,” De Jager said.

“Obviously this was a contradiction, so we have broken that knot and now we can do the work,” he said.

The position taken by eurozone ministers late Monday, he said, gives a “broader mandate” and “several options” to a working group that was tasked with coming up with proposals for the new bailout.

The European Central Bank, however, has reaffirmed its opposition to a “credit event” or selective default in Greece.

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“Obviously the ECB has stated in the statement that it remained in its position but the 17 ministers did not exclude that anymore so we have more options, broader scope to work with,” De Jager said.

Germany, the Netherlands and Finland have insisted on private sector involvement in the bailout, which is expected to come close to last year’s 110-billion-euro rescue, even if it means a selective default.


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