The EU and Greece--How to help

This article talks about how EU leaders come up with a plan to help Greece and to rescue Greece from a sovereign credit crunch.After joining the European single currency in 2001, the Greek government and people embarked on a borrowing and spending spree fuelled by the euro zone’s low interest rates, and cooked the books for years until the ghastly day last year when the incoming Socialist government announced that the country’s budget deficit was some 13%: twice as large as previously admitted.The mechanism agreed late on March 25th by the 16 countries that share the euro was harsh. At the insistence of Mrs Merkel, Greece will be able to tap into emergency help only if available market financing has been deemed “insufficient” by experts from the European Commission and European Central Bank. In a sign that something terribly serious had been agreed, the declaration used a Latin term, ultima ratio, to describe the last-ditch nature of the mechanism.IMF involvement is seen as a guarantee that financing would be subjected to tough conditions, but France strongly opposed the involving of IMF.The IMF is now part of the rescue mechanism, but a majority of the money in a rescue package would come from bilateral loans from the 15 other members of the euro zone. These would be offered at above average euro-area interest rates, to “set incentives” for recipients to “return to market financing as soon as possible”.