Finance ministers tackle Greek bailout No. 2

European finance ministers will huddle Monday for discussions certain to centre on a second Greek bailout, while anointing an Italian to head the pivotal European Central Bank. The 17-nation eurozone and the other 10 European Union states will hold a series of meetings alongside International Monetary Fund managing director Dominique Strauss-Kahn during which a 78-billion-euro ($110 billion) rescue package for Portugal -- like Greece mired in debt -- is also expected to be voted through. The European ministers are also set to recommend Italian central bank governor Mario Draghi as the successor to France's Jean-Claude Trichet as president of the European Central Bank. "Done deals" on both counts, according to EU diplomats, although the ascension of an Italian poses two political problems, sources say, given the presence of another Italian, Lorenzo Bini Smaghi, on the central bank's executive board. Wealthy northern eurozone states such as The Netherlands fear too much influence being wielded by debt-laden Mediterranean states, while France could seek to retain a seat on the ECB's inner decision-making panel for itself. What is clear is that one year after a 110-billion-euro bailout of Greece, the black hole facing the government in Athens will again top the unofficial agenda. French Finance Minister Christine Lagarde told the BBC on Thursday night that "the consideration at the moment is to extend those (bilateral loans) if it was necessary," after being pressed repeatedly to rule out a second bailout with new cash loans. She suggested a system of bilateral loans from eurozone states used first time around was again an option. Lagarde was sharing a platform with British counterpart George Osborne, who insisted "Britain should not be involved in future discussions because we were not involved in the original package." The Conservative-led government in London says its hands were tied by Labour predecessors on participation in an EU-wide fund -- the European Financial Stability Mechanism already used to part-finance loans to Ireland under its 67.5-billion-euro international bailout and which will also figure in the Portuguese aid package. Various sources have suggested that an additional 50-60 billion euros will be required to keep Greece afloat over the next two years, although an EU source said these numbers were "false". German daily Die Welt meanwhile claims in its edition to appear on Saturday that Berlin, the European Commission and the IMF are now ready to consider rescheduling Greece's debts. After the commission Friday warned that next year's Greek public deficit would hit 9.5 percent of GDP, well up from a previously anticipated 7.4 percent, the newspaper cited a source close to the commission as saying: "When you look at the new data, we know the situation has changed." The ECB and France are against restructuring. Commission spokesman Amadeu Altafaj denied the report's claim of EU executive backing as "absurd" when contacted by AFP. Fundamentally, Monday's Eurogroup will not be about how fresh Greek aid should be paid out, but should focus on "what Greece has to do" just to ensure it receives the remaining tranches of the existing IMF loan agreement, one diplomat said. No concrete action is expected prior to a final EU-IMF report, due in June, on Greece's progress on its obligations under the existing bailout deal. The IMF has called on Greece to sell off more of the family silver. After a deeper-than-anticipated national recession, Finance Minister George Papaconstantinou says Athens needs to plan its next steps for 2012 and 2013. Greece was due to return to commercial money markets next year, but wants to postpone the maturity of 65 billion euros worth of Greek bonds this year and next, and push back deficit reduction deadlines with the EU. Athens already owes more than a year-and-a-half of its entire economic output, at least 330 billion euros. Greece's cost of borrowing is now above 15 percent for benchmark 10-year bonds -- more than double the rate at the time of bailout No.1. Meanwhile, no formal breakthrough is expected on Dublin's calls for eased terms on the interest demanded for its own EU-IMF bailout.