By ANGELA CHARLTON and GABRIELE STEINHAUSER, Associated Press
BRUSSELS (AP) — Greece's hopes to finally get its bailout and dodge default next month were boosted Friday, when key European leaders, including German Chancellor Angela Merkel, sounded confident a deal could be agreed.
The leaders of Germany, Italy and Greece are "optimistic" the euro130 billion ($170 billion) rescue package can be cleared next week, a spokesman for Merkel said Friday after the three held a conference call. Hours earlier, the French prime minister warned against letting Greece default.
That means the euro currency union's main powers are now pushing toward resolving the uncertainty hanging over Greece at a meeting of eurozone finance ministers on Monday.
Agreement on the bailout, which comes on top of a euro110 billion ($145 billion) rescue granted in 2010, has been delayed for months due to doubts over Greek political leaders' commitment to tough new austerity measures as well as the worsening economic situation in the country that kicked off Europe's debt crisis two years ago.
Some eurozone governments' caution over handing out more money to Athens had investors wondering whether Greece would be forced to default and leave the euro instead. After days of confusion, Germany — the main bankroller for the bailouts — made it clear it wanted to see Greece's deal through.
"The three leaders are optimistic that the finance ministers can find a solution to the pending questions at the Eurogroup on Monday and thereby contribute to the stabilization of Greece," Steffen Seibert said in a statement, after Merkel, Italian Prime Minister Mario Monti and Greece's Premier Lucas Papademos held a conference call earlier Friday.
Papademos later also called Dutch Prime Minister Mark Rutte, whose country is one of the biggest bailout skeptics.
Greece is under big pressure to get the green light on the bailout so it can move ahead with a related euro100 billion ($130 billion) debt-relief deal with private bondholders that till take several weeks to implement. That deal has to be completed before March 20, when Athens faces a euro14.5 billion bond redemption it cannot afford.
Tensions between Greece and the rest of the eurozone hit new highs this week as politicians in Athens and other European capitals blamed each other for the problems related to the bailout. Seven people were detained Friday following an anti-austerity protest in which eggs were thrown at the German embassy in central Athens.
But French Prime Minister Francois Fillon warned that the fallout of letting the country go up in financial flames would be far-reaching.
"We must do absolutely everything so that there is not a default by Greece, which would be dramatic for Greeks themselves and dramatic for Europeans," he said on RTL radio Friday.
Now that the Greek Parliament has approved austerity measures demanded by international creditors and banks have agreed to help in the bailout, "the Europeans must now honor their commitments. That is the position that France is defending," Fillon said.
Some European politicians have downplayed the effects of a default by Greece, but Fillon called that "totally irresponsible."
The last issues to resolve before a bailout is rubber-stamped include making sure the aid program brings Greece's debt down to a sustainable level and setting tighter controls on Athens' spending decisions.
Germany and several other countries want Greece to set up a form of escrow account — separate from the main government budget — that would give priority to servicing Greece's debt over spending on government services.
The European Commission, the EU's executive, is working on several options for such an escrow account. An EU official said that, among several options, the Commission is looking at a "transit account" through which Greece's bailout money would be funneled.
The account would have a "hierarchy of payments," with servicing the country's debt at the very top, the official said. He was speaking on condition of anonymity because the details of the plan are still in flux.
The official said there was "a critical mass" of euro countries in favor of such an account. He also said Greece was not in a position to challenge the plan. "It's part of it (the bailout deal) as long as some delegations want it to be," he added.