EU Debt Crisis: Greece's Funding Gap and European Leadership Crisis

The European Union is facing a critical meeting in Brussels, where EU ministers will discuss the Greek bailout talks in the wake of the arrest of IMF boss, Dominique Strauss-Kahn. The absence of Strauss-Kahn is expected to have a significant impact on the discussions, as he was a key player in bridging the Atlantic and mobilizing resources for the European crisis. Julian Callow, Chief European Economist at Barclays Capital, warned that the Greek deficit numbers have not been working out as planned, and a large amount of additional money is needed to be found for Greece just for next year.

Key Takeaways:

• The absence of Dominique Strauss-Kahn at the EU meeting in Brussels will likely have a significant impact on the Greek bailout talks, as he was a key player in bridging the Atlantic and mobilizing resources for the European crisis.
• Greece's funding gap for 2012 is a pressing issue, with a large amount of additional money needed to be found to meet its obligations.
• The IMF can still function without Strauss-Kahn, but his absence may make it more difficult to reach a consensus on Greece's funding needs.
• The EU needs to demonstrate decisive leadership to address the debt crisis, with Greece needing to show that it is serious about privatization and selling off state assets.
• The Italian government is expected to put forward Mario Draghi as its candidate for the ECB Presidency, who is well-qualified for the position given his background as an academic economist and his experience at the Italian Treasury.

Statistics:

• Greece's deficit numbers have not been working out as planned, with a significant funding gap for 2012.
• The IMF has a new Acting Managing Director, John Lipsky, who will play a key role in the discussions.
• Greece needs to find an additional EUR50 billion to meet its obligations, including through privatization and selling off state assets.
• Mario Draghi, the nominated candidate for the ECB Presidency, has a strong background in economics and has experience at the Italian Treasury.

Sources:

• Bloomberg TV, May 16, 2011
• Interview with Julian Callow, Chief European Economist at Barclays Capital
• Bloomberg News Transcript, May 16, 2011