Eurozone Finance Ministers Tackle Greece, Debt Rescues

Eurozone finance ministers meet Friday aiming to ensure that bailed-out member states stick to the rescue script, as further help needed by some waits out the German elections.

"We are going to listen to all the countries that have been bailed out," to see what progress has been made and what more needs to be done, one European government source said.

Twice-bailed out and still struggling Greece may get the most attention as the 17 ministers gather in Vilnius for informal talks followed by a meeting with their non-euro peers.

It is now widely accepted that Greece needs 10 billion euros ($13.3 billion) or so to balance its finances. But German Chancellor Angela Merkel, who faces polls September 22, has been loath to sign off just yet on another rescue unpopular with her voters.

Ministers will also discuss how to help Ireland as it exits its rescue at the end of this year. Portugal is also a cause for concern after parts of its bailout programme were ruled illegal.

Portugal, due to end the programme in mid-2014, now has to find other ways of meeting its targets. But with the economy only just returning to growth, there is very little room for manoeuvre.

For Dublin and Lisbon, the question is "will they be able to return to the financial markets" on their own or will they need help to make the transition, the European government source said.

Irish Finance Minister Michael Noonan has suggested a credit-line of 10 billion euros would serve "as a backstop to give confidence" to investors in the country.

"We would be hoping that we never have to draw on (it). It's just to have it there as comfort to the markets and then we fund on the markets," Noonan said when asked recently about possible eurozone support later this year.

Ministers will also review progress in Cyprus, bailed out earlier this year for some 10 billion euros via a controversial rescue which saw creditors, shareholders and larger depositors forced to pay to wind up one of its largest banks.

Cyprus called for help when it could not keep its bloated banking sector afloat. Slovenia faces similar problems, with its lenders at risk as boom turned to bust in recent years.

Last week, the European Commission approved Slovenia state aid worth more than one billion euros for two small banks, Factor Bank and Probanka, on the basis it was "necessary to preserve the stability of the financial system".

Hanging over the meeting is what happens at the polls in Germany, Europe's biggest economy and its paymaster, with decisions put on hold to see if Merkel wins another term.

"There are two or three major issues which have been put back to October" because of the German elections, a diplomatic source said.

In the meantime, "the pressure is off and we will not complain about that," the diplomat said, recalling the dark days of the debt crisis and the anguished eurozone meetings needed to hammer out a response.

If the sense of crisis has receded, helped by the end of a damaging 18-month recession, it is not over. The eurozone knows that it has to continue to press ahead with the reforms adopted so far to ensure there is no repeat.

A third rescue for Greece may be relatively small compared with the 240 billion euros so far -- plus a debt write-off worth some 100 billion euros -- but how it is done is still fraught.

Berlin leads opposition to any further debt write-down, saying it would undercut confidence whilst also inevitably hitting Greece's partners, who have put up money to help.

The meeting of all 28 EU finance ministers on Saturday is expected to review progress on plans for a 'Banking Union,' the centrepiece of a new regulatory structure to prevent failing lenders bringing down the whole financial system.

Embraced initially as essential to head off future crises, many member states, including Germany and non-euro Britain, are now increasingly reluctant to give up their right to supervise their own banks.