MADRID (MNI) – Greece has begun talks with an eye towards
activating the joint Eurozone-IMF aid plan that was unveiled last
Sunday, European Central Bank Governing Council member Ewald Nowotny
said here early Thursday evening.

“As you know, Greece has already started talks in that direction,
and this is why all this planning has been done. So [the plan] is not
just for theory but for practice,” Nowotny told reporters outside a
reception for Eurozone finance ministers and central bankers on the eve
of a two-day meeting that will start tomorrow.

Later, Nowotny reiterated that a letter sent today by Greece
Finance Minister George Papaconstantinou requesting talks with officials
from the ECB, the IMF and the European Commission, was a “first step” in
the process of formally requesting aid.

Eurozone finance ministers last Sunday agreed on a three-year
contingency plan in which they would make up to E30 billion worth of
loans available to Greece in the first year, with additional funds
negotiable in subsequent years. The IMF would contribute another E10 to
E15 billion, sources said.

But since the Eurozone announcement last weekend, markets have been
frustrated by vagueness and lack of detail about the plan — in
particular, how the IMF portion of it would mesh with the Eurozone
loans.

A Greek official told Market News earlier today that Greece was
seeking “immediate” clarification of those details, though he said the
letter from Papaconstantinou did not in itself constitute a request for
aid.

Asked about the continued turbulence in markets, which have kept
Greek bond yields at exceptionally high levels despite the aid deal,
Nowotny responded: “Well, but things have to be activated. So therefore
I think what is necessary is really to activate the measures foreseen,
and then I’m sure they will have an impact on the markets.”

Nowotny also sought to dispel fears that the problems in Greece
could spread to other fiscally-challenged EMU states such as Portugal
and Spain. “This was exactly the reason why the measures by the EU have
been taken, in coordination with the IMF, so that should be exactly the
way to prevent spreading to other countries,” he said.

Nowotny refuted the notion that loans from the IMF might be
considered senior debt while the EU loans would not. “No, I don’t think
so,” he said. “What is important is that there is a very well-planned
and structured approach and there always will be a very close
cooperation between the EU and the IMF, so I don’t see any major
problems in that respect.”

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