PARIS (AP) — European finance ministers will try on Monday to give new momentum to talks on a Greek debt relief deal that is crucial to avoid a default but remains elusive due to disagreements with the country's private creditors.
Talks to have the private creditors take about euro100 billion ($129 billion) in losses on their bonds have yet to reach an agreement, but a deal is necessary to avoid a default this spring. The creditors would get new bonds of a lower value and interest rate in exchange for existing ones.
The French and German finance ministers, Francois Baroin and Wolfgang Schaeuble, were holding talks in Paris before a meeting with their eurozone counterparts later in the day in Brussels.
Germany, which is heavily involved in the talks because it pays for most of Greece's bailout, is leading a push for the new bonds to pay lower rates than the creditors are currently willing to accept.
Greek officials say negotiations on the private debt writedown are continuing over the phone, while no appointment has been set yet for new face-to-face talks this week.
Last week, representatives of the country's private creditors held three days of intensive talks with Greek Prime Minister Lucas Papademos and Finance Minister Evangelos Venizelos on the bond swap.
The negotiations had been due to resume Saturday, according to Greek officials. But Charles Dallara, managing director of the Institute of International Finance, which is handling the talks on behalf of banks and other private holders of Greek government bonds, left the Greek capital for a "long-standing engagement" in Paris on Saturday.
Dallara told The Associated Press over the weekend that he is "constantly talking by phone" with Greek officials and that the talks are "coming together."
A spokesman said the IIF's legal and financial advisers are still in Athens working on several "outstanding issues" with Greek officials and that Dallara will return "as needed."
On Sunday, Dallara was quoted by private Antenna TV as saying he had presented Athens with "the best possible" proposal on the debt writedown, and that "the main pieces are in the puzzle."
But he warned that Greece faces the stark choice of either voluntarily restructuring its debt mountain or going bankrupt.
The writedown is a key part of Greece's second international bailout, agreed in October but not yet finalized. Since May 2010, the country has been surviving on a first euro110 billion ($142 billion) batch of rescue loans agreed on condition of deep spending cuts and sweeping public sector reforms.
Debt inspectors from the EU, the European Central Bank and the International Monetary Fund — collectively known as the troika — will be meeting government officials in Athens this week on the course of the austerity program. Without approval from the troika, Greece will be cut off from its rescue loan lifeline, which would force it into a messy default on its debts in late March and — most likely — abandon the euro.