Euro Zone Leaders Clinch Rescue Plan for Greece

After weeks of uncertainty that revived fears about the foundations of the euro, European leaders on Thursday clinched a new rescue plan for Greece that could push the country into default on some of its debt for a short period but would give Europe’s bailout fund sweeping new powers to shore up struggling economies.

At a press conference late Thursday, Chancellor Angela Merkel of Germany confirmed the aid package of 109 billion euros ($157 billion) for Greece. European officials also said that financial institutions that own Greek bonds would contribute 50 billion euros through 2014 through a combination of debt extensions and the purchase of discounted Greek bonds on the secondary market.

The outlines of the plan worked out by leaders of the 17 euro zone nations seemed particularly bold, dealing with the economic problems of bailed-out Ireland and Portugal as well as Greece, and calling for nothing short of a “European Marshall Plan” to get Greece itself on a road to recovery. The underlying economies of those countries — and others — remain remarkably frail, however.

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