The EU was hoping to postpone the Greek bailout until after the British election was over, and they had secured another five years of British europhile government. But the collapse in the bond market for Greek debt has made a more urgent reponse necessary.
This is putting the EU on the spot, as there are many problems yet to overcome if a Greek rescue package is to be put together. For a start many Germans are furious that Germany will be required to pay the lion's share of a bail-out, and there will be legal challenges made.
From the WSJ,
Among other things, investors are wondering whether Greece's rescuers will now demand to be paid back first, putting other bondholders at a disadvantage, Mr. Pamphilon says. That is typical of the IMF, but it's not clear what the euro-zone governments will demand.Mr. Altafaj, the EC spokesman, said talks on this topic were continuing and that there was as yet "no definite answer."
There is also another unknown: How long would European countries agree to prop up their weak neighbor?
Approving the aid request in Germany's parliament will be an exhausting struggle, and critics there have threatened legal challenges. A bailout is deeply unpopular in Germany, which will put up €8.4 billion of the €30 billion euro-zone package.
But that figure is just for this year. Barring an economic miracle, Greece will need more next year, and probably the year after.
"With the bond markets in cardiac arrest," says Ms. Komileva of Tullett Prebon, "there is little hope for Greece but a long period of EU transfers."
This is not what euro-supporting Nick Clegg and Vince Cable need in the next ten days as they gear up for the election in Britain. Cameron need only probe gently and ask questions as to their intentions if Britain is asked to pay Greek debts off.
The EU could yet become an election issue, regardless of all parties' preferences that it does not do so.