Germany and France consider bailout of Greece

Germany and France may be willing to provide bailout funding to Greece if certain conditions are met, it has been suggested.

European Union (EU) leaders are meeting in Brussels this week with the topic of the stricken Greek economy high on the agenda.

But discussions of what form a potential bailout would take are still ongoing and a financial commitment is unlikely to be agreed at the current talks, reports the Financial Times.

France and Germany are expected to pledge support for Greece, but French officials have said Angela Merkel's German government is showing some "reticence" about one potential bailout package.

Under that plan, Greece would be granted funding as long as it provided assurances that its budget deficit will be cut by four per cent a year between now and 2012.

Meanwhile, a senior German official has outlined two potential bailout package options that are likely to be discussed in Brussels – either the provision of loans to Greece or a commitment to buy the country's sovereign debt.

"Both are conceivable options, which will have to be decided on a case-by-case basis," he stated.

However, the consensus from various officials appears to suggest that Greece will only receive a "pledge of solidarity" from other EU members at the end of this week's summit, with a concrete plan to be agreed at a later date.

It is likely that the International Monetary Fund (IMF) will only be acting in a technical capacity rather than providing any potential bailout funding itself, according to one French source.

Herman van Rompuy, the EU's new president, is believed to have insisted that countries within the eurozone come up with their own solution to the Greek crisis.

He wants an internal resolution to avoid the humiliation of asking the IMF or Washington to bail out Greece and prop up the euro, reports the Times.