Friday 22 July 2011 12.58 EDT
First published on Friday 22 July 2011 12.58 EDT

For more than a year, Europe's attempts to get to grips with its sovereign debt crisis have been dogged by the conflicting signals emitted by the rival players in Berlin, Frankfurt, Paris, Brussels, and Athens, usually tailoring their messages to very different constituencies.  There has been a problem of "communication and miscommunication", a senior EU official admitted. " A certain cacophony of messages." 

"One of the most chaotic summits ever," said Sony Kapoor of Re-Define, an economics thinktank in Brussels. " There were many mixed and often contradictory messages on the numbers." 

The German, Dutch and Greek governments were all saying different things about the figures agreed, while experts at the European Commission and the European Financial Stability Facility – the bailout vehicle – tried to provide a detailed breakdown of how the complex bailout sums might work. " There are a lot of estimates and a lot of assumptions in here," conceded a commission official.  But this is basically how the numbers add up:

• Since May last year when the first Greek bailout was agreed, Athens has received €65bn from the eurozone and the International Monetary Fund.  Under the new package, the contribution will soar to about €200bn if all the elements are added together. 

• The new money is €109bn in loans from the eurozone and the IMF over the next three years.  That figure includes a projected €28bn from Greek privatisation proceeds, although if Athens fails to deliver, the eurozone/IMF will need to make up the difference to cover Greece's financing gap. 

• In addition to this, the Greeks will get a further €45bn in eurozone/IMF loans left over from last year's €110bn bailout. 

• Greece's private creditors – the banks, insurance companies and pension funds holding Greek debt – are expected to contribute €50bn to debt relief by rolling over or swapping €54bn of Greek bonds maturing by 2014 and by taking part in a bond buyback that would allow Athens to retire €33bn of debt at a discounted price of €20bn. 

The overriding aim declared by EU leaders – a fundamental policy shift which has crystallised only in recent weeks – is to reduce Greece's crippling and unsustainable level of debt.  At €340bn, it is projected to reach almost 158% of gross domestic product this year and peak next year at 166%, according to European commission analysis. 

But the impact of the planned debt buyback, rollovers, swaps and lower borrowing costs is projected to cut the debt level by a mere 12%. 

Greece's "debt burden remains almost as unsustainable as before the package was announced," said Kapoor. 

Moreover, all of these figures are based on the hope that Greece's private creditors will deliver on semi-pledges presented to Thursday's summit by the International Institute of Finance, which represented the main private bondholders. 

The private sector participation is "voluntary", meaning it is not clear who will take part, although the bailout plan assumes a participation rate of 90% of Greece's private lenders. " We'll have to see if that will be attained," said a second senior EU official. 

Of the main €109bn, about €20bn is to be used to buy back Greek bonds, and another €20bn to recapitalise Greece's banks. 

On top of the bailout fund, the eurozone is to make €35bn available as collateral support to the European Central Bank when Greece, as expected, is declared to be in "selective default". 

Officials are confident that the selective default will be extremely shortlived, meaning the collateral support for the ECB will be more theoretical than real. 

In the previous bailouts of Greece, Ireland and Portugal, the Europeans and the IMF have split the costs 2-1.  EU officials hope that will prevail for the new bailout but expect the IMF to balk. 

The estimates will harden into more precise figures only when the Greek government tables a "detailed offer" on bond buybacks and when – or if – the 17 governments and parliaments of the eurozone have grappled with and endorsed the entire package.