After a Greek-Finnish agreement earlier this week under which Athens would provide collateral in exchange for Finland's share of its rescue package, other nations are clamoring for collateral as well. That could unravel the whole deal.
That's because Greece has said it is not discussing such arrangements with any other nation because the nation says such talks would cancel the bailout agreement. Still, several participants are expressing reluctance to proceed without collateral, although demanding it could defeat the purpose of the rescue.
The meeting of euro zone officials in July to put together an agreement to bail out Greece for a second time had allowed for a collateral agreement as well, according to a Reuters report, that could be put in place "where appropriate." That collateral agreement was addressed in a briefing by European Commission (EC) spokesman Amadeu Altafaj, who said the group was discussing the agreement.
He was quoted saying, "The euro member states will have to assess the outcome of this bilateral discussion between Finland and Greece.... Discussions are already taking place. And therefore we have no further comment at this stage but the issue is already being examined."
Euro zone nations considering the agreement with Finland since Slovakia, Austria and the Netherlands said they also wanted collateral agreements for their share of the rescue loans. Such agreements could put the whole bailout in danger, since they would deprive an already cash-starved country of funding at a time when it needs it most.
Analysts were aghast at the idea. Marco Valli, chief euro zone economist at UniCredit, was quoted saying, "If you want to sell your pact to save Greece then you should not be fighting about this—it undermines the credibility of the package." Markets are already wary about a lack of surety in the euro zone's approach to its debt crisis, and such infighting would only further upset them.
Theodore Krintas at Attica Bank in Greece said in a statement about the news, "With more of Greece's euro zone partners asking for collateral for their contribution to the second rescue package, the available pool of money becomes smaller, rendering the success of the second package more difficult."
The three nations demanding collateral, added to Finland, would contribute about 11% of the euro zone's contribution to Greece's second bailout of 109 billion euro ($153.5 billion).