France's private support for Greece a matter of degree
The Greek financial crisis is now moving quickly - with confirmation from President Sarkozy today that his officials have struck a deal with the French banks who hold maturing Greek debt.
The message is that if - and it is still a big if - the Greek government is able to pass that austerity package in the next few days, the eurozone will fulfil its side of the deal by coming up with a structure for a second Greek bailout, which Germany and everyone else can support.
But plenty can still go wrong, and even if it doesn't, the eurozone will have wasted an enormous amount of time on a relatively small piece of the puzzle.
The deal with the French banks, leaked to French newspapers on Sunday, would mean French banks only walking away with 30% of the proceeds from the Greek debt coming due between now and 2013.
Half would be reinvested in 30-year Greek government debt, with the remaining 20% put into triple A securities as a form of guarantee against losses on the Greek debt.
Officials have apparently dubbed this a "Brady bond but entirely private".Concoction
It is designed to get the thumbs up from ratings agencies - saving Greece from a "technical default" - while making it slightly easier for the government to service its debt.
Given the time that has spent concocting the arrangement, you have to assume to it will pass the ratings agency test (though nothing is certain, given the current state of relations between the French and German governments and the ratings agencies).
For the same reason, you can be at least cautiously optimistic that the IMF and the Greek government will be able to identify some financial advantages in this for Greece.
But as a matter of simple arithmetic, if the banks don't lose and Greece gains, there must be an additional subsidy in there somewhere from eurozone governments, either in the "high-quality assets" provided as a back up or, possibly, the promise of preferential treatment for these new bonds in the event of a default.
The fact that the private sector involvement is subsidised does not necessarily make it wrong.Moot points
Once you've decided to bail out the Greek government a second time, you might say it's a moot point what precise form that public support takes.
But, if so, it's a moot point with important financial consequences.
As I write, French officials ought to be writing internal memos for eurozone ministers showing clearly why this form of indirect subsidy for the Greek government provides more "bang for buck" than simply lending yet more money upfront.
And if it does not pass that test, why it represents a worthwhile use of funds which are guaranteed by eurozone taxpayers.
Likewise, the complexity of the deal is not a definitive argument against it. (For example, as an extra twist, part of the interest on the new 30 year debt is to be linked to the country's future economic growth.)
True, a simpler arrangement would probably have inspired greater confidence; the more bells and whistles, the more people naturally wonder whether the parties have something to hide.Long road
But if there were a simple solution to the rollover conundrum they would surely have found it before now.
No, the greatest objection to the deal with French banks is simply the amount of time it has taken to get here.
Think about it. Eurozone finance ministers have been talking seriously about involving the private sector in a second support package for Greece since the end of April.
Now, if they're lucky, they will reach an agreement - in principle - when they meet on Sunday.
Also known as the 3rd of July. And once again, that's if everything else goes right, whether in Athens, Frankfurt or Berlin.
By common agreement, the agenda should then shift to much bigger questions about the future of the eurozone, including, perhaps, the suggestion, from Jean-Claude Trichet, that they move to a common eurozone finance minister; or the proposal, from several quarters, to create a common eurozone bond covering some proportion of Eurozone sovereign debt.
These are controversial suggestions, perhaps unworkable given the current state of eurozone public opinion.
But looking at the mayhem of the past year or so, foes and fans of greater European integration can agree that ministers have more important things to think about for two months than the rollover of roughly 30bn euros of Greek debt by foreign banks.