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Puncturing Greece's Dreamfor Sharing Its Pain
ByLANDON THOMAS Jr.
LONDON — In March, just as it was becoming clear thatGreecemight have to ask Europe for another package of loans to prop up itsfailing economy, Prime MinisterGeorge A. Papandreouseriously considered a radical plan intended to resolve, once and for all, hiscountry’s debt crisis. Under the proposal, Greece would transfer asmuch as €133 billion — or 40 percent of its government debt — totheEuropean Central Bank , which would then pay off the obligation by issuing its own euro bond.It would be a “restructuring without a haircut,” in the view of theplan’s proponents, who enthusiastically described it to Mr.Papandreou in a series of secret meetings earlier this year. Theresult, ideally, would be to ease the weight of the Greek debt on theeconomy, clearing the way for renewed growth, while keeping the bankers and credit ratings agencies on board.In many ways, the plan was a dreamy alternative to the grimcalculus of Europe’s demands for more austerity from Greece inreturn for more loans. And Mr. Papandreou went so far as to ask apolitical ally and the plan’s two proponents, a British and a Greek economist, to lobby Europeans in its favor.But, according to economists who participated in the discussions, the