Greece exercised an agreement to sell a 10 percent stake in the Hellenic Telecommunications Organization, the state-owned telecommunications company known as O.T.E., to Deutsche Telekom of Germany for about 400 million euros, or $585 million. The German company said it would honor the agreement.

While that sum will make only a small dent in Greece’s total debt of 330 billion euros, Lorenzo Bini Smaghi, a member of the executive board of the European Central Bank, said the country had marketable assets worth 300 billion euros and was not bankrupt.

“Greece should be considered solvent and should be asked to service its debts,” Mr. Bini Smaghi said Monday, signaling that the bank remained firmly opposed to any plan to allow Greece to stretch out its debt payments or oblige investors to accept less than full repayment, a so-called haircut.

Speaking in Berlin, Mr. Bini Smaghi offered an unusually detailed and forceful rebuttal to German leaders who are pushing for investors to share the cost of a Greek bailout.

Top officials of the European Central Bank usually avoid sparring with elected officials in public, and Mr. Bini Smaghi’s comments illustrated the intensity of the debate on how to keep Greece afloat.

Restructuring of Greek debt would be costly for European taxpayers, reward speculators and discourage Greece from modernizing its economy, Mr. Bini Smaghi said.

A sovereign debt restructuring “may have severe implications, both for the debtor’s and the creditor’s economies,” Mr. Bini Smaghi said, according to a text of the speech.

“Restructuring should only be the last resort, i.e., when it is clear that the debtor country cannot repay its debts,” he said.

Many economists say they believe some kind of restructuring is inevitable, and European governments have begun warming to the idea as a way to show their taxpayers that investors will also have to help pay for Greece.

But Mr. Bini Smaghi contested the idea that “there exists such a thing as an orderly debt restructuring.”

“More often than not, restructurings have been disorderly, harmful and fraught with difficulties,” he said.

Among other catastrophic effects, he said, Greek banks would be devastated and require bailouts that the Greek government would not have the money to finance. The problems would spread to other countries exposed to the Greek economy, and ultimately taxpayers in those countries would suffer, Mr. Bini Smaghi said. Greece would also not have the resources needed to make its economy competitive again.

“Imposing haircuts on private investors can seriously disrupt the financial and real economy of both the debtor and creditor countries,” he said.

German and French banks are the biggest holders of Greek government debt, according to data released Monday by the Bank for International Settlements in Basel, Switzerland. German banks held $22.7 billion of Greek government debt at the end of December, while French banks held $15 billion.

Mr. Bini Smaghi said a default would reward speculators who had bet on Greece’s failure, while punishing investors who had supported the country.

The European Central Bank itself would suffer if Greece defaulted, because since last year it has bought the country’s debt to stabilize bond markets.

The bank owns bonds valued at 75 billion euros from Greece, Ireland, Portugal and possibly other countries.

But the bank’s exposure is greater than that because it also accepts the bonds from banks in the euro area as collateral for loans carrying an interest rate of 1.25 percent.

On Monday, a British research organization, Open Europe, estimated the European Central Bank’s total exposure to the Greek government and Greek banks at 190 billion euros.

Critics say that the bank’s credibility has suffered because its stake in Greek debt creates a conflict of interest.

“Huge risks have been transferred from struggling governments and banks onto the E.C.B.’s books, with taxpayers as the ultimate guarantor,” said Mats Persson, director of Open Europe, an organization skeptical of the monetary union, backed by British business executives.

The European Central Bank declined to comment on Open Europe’s estimate of its exposure to Greece. The bank has never disclosed what kind of bonds it has purchased.

The Greek government has begun trying to raise money by selling stakes it owns in companies like O.T.E., but the privatization drive has encountered fierce resistance from citizens already weary of austerity measures.

Deutsche Telekom already owns a 30 percent stake in O.T.E. that it bought in 2008. A Telekom spokesman, Andreas Fuchs, said that the price for the 10 percent stake was still being calculated, but would be about 400 million euros.

Article source: http://www.nytimes.com/2011/06/07/business/global/07euro.html?partner=rss&emc=rss