EU hopes Greece bailout to contain crisis, Greece draws 'red line'

Barroso said he was confident Greece's debt crisis could be contained with help from a planned bailout by Europe and the International Monetary Fund.

EU hopes Greece bailout to contain crisis, Greece draws 'red line'

European Commission President Jose Manuel Barroso said Friday he was confident Greece's debt crisis could be contained with help from a planned bailout by Europe and the International Monetary Fund.

Debt restructuring was not on the cards in Greece and was not an option anywhere in the euro zone, he said.

"There is no doubt that Greece's needs will be met in time," Barroso told reporters in Beijing. "I am confident that the talks will be concluded very soon, meaning (the) next days."

Barroso said he had discussed Greece's troubles with Chinese Premier Wen Jiabao and that China remained confident in the euro even as sovereign debt worries ripple across Europe.

"I don't think that China is lacking confidence in the European Union or the euro, on the contrary," he said.

He also said Chinese leaders "never mentioned" any possible aid for Athens. Reports Greece would sell bonds to China spurred market optimism earlier this year but the Greek government subsequently denied there was any deal in place.

In the past, EU leaders have blamed an undervalued yuan as a source of global imbalances, fuelling China's massive trade surplus with Europe. Barroso had a softer tone -- in public, at least -- after his latest round of meetings in Beijing.

"We are not putting pressure on anybody," he said.

China had "clearly understood" the European Union's message on currencies, Barroso said.

Beijing has effectively pegged the yuan at about 6.83 to the dollar since mid-2008, trying to cushion its exporters from the global economic downturn. Tracking the dollar's movements, the Chinese currency has steadily appreciated against the euro since the end of last year.

"Possible effects of contagion"


Barroso said they were "making solid, rapid progress" in drawing up the rescue package, which he described as critical.

"It is about safeguarding the overall financial stability of the euro zone," he said, adding it would "prevent further possible effects of contagion".

German politicians have said the aid package could be worth 100-120 billion euros ($133-160 billion) over three years, against an original plan for 45 billion euros of aid in 2010.

Greece has readied severe austerity measures demanded as a condition for the aid, providing relief to financial markets but drawing warnings from unions of a mighty battle to come.

Greece's woes served as a reminder of the need to address economic imbalances inside and beyond Europe, Barroso said.

International Monetary Fund, European Union and European Central Bank officials are in Athens to negotiate the bailout and hope to wrap up a deal within days in an effort to avoid a debt default in Greece that could sink other fragile EU countries.

"Talks on Greece possible this weekend"

Euro zone finance ministers may hold a teleconference on Greece this weekend, the spokesman for the chairman of their meetings said.

The meetings of the Eurogroup are chaired by Luxembourg Prime Minister Jean-Claude Juncker.

"Mr. Juncker told the Luxembourg press last night that he does not exclude that there will be a teleconference on Greece this weekend," spokesman Guy Schuller said.

Separately, France's economy minister said on Friday there was likely to be a euro zone finance ministers meeting this weekend on Greece.

"Greek opinion on measures"

Opinion polls show a majority of Greeks oppose resorting to the IMF and disagree with the conditions.

"Armageddon is coming. The situation caused by speculative mechanisms will be tackled only because the Germans have realised the domino effect that would have followed," Greece's conservative daily newspaper Eleftheros Typos said.

"But the lenders are setting the terms, and they are incredibly tough. At least for three years they will drink our blood. And this is not an exaggeration."

"I don't think these measures will get us out of the crisis. There is no salvation for Greece," said Vassilis Fragiskakis, 32, a glass factory owner.

Fragiskakis' factory, which employees 35 people, has seen business go down in the last two months.

"The situation is very difficult. The reason we haven't fired anyone is that we see these people as our family, but in the last two months we can barely make enough to pay their salaries," he said. "It's tragic."

"Red lines"

But, Prime Minister George Papandreou said on Friday Greece needs austerity measures to survive,

Papandreou said the measures were vital to securing aid.

"Many talk about red lines. The only red line is the country's interest. Today the top priority is the survival of the nation. This is the red line," Papandreou told parliament.

"The economic measures we must take ... are necessary for our country's protection, for our future, for us to be able to stand on our feet."

Union officials said Greece was asked to slash its deficit by 10 percent of GDP in 2010-2011 by raising VAT tax, scrapping public sector bonuses amounting to two extra months pay, and freezing civil servants' wages in exchange of getting the aid.

The Socialist government, elected in October on a promise to tax the rich and help the poor, has already announced three sets of austerity measures since revealing last year that the budget deficit had shot up to more than twice previous forecasts.

The public sector union ADEDY, which represents half a million workers, called on Friday for a four-hour work stoppage on Tuesday to protest against the belt-tightening, on top of a 24-hour nationwide strike already decided for Wednesday.

"We want to help the country exit the crisis, but if the government continues with these policies that hurt workers only, we have no other choice but to oppose them with all our might," ADEDY's general secretary Ilias Iliopoulos told Reuters.


Agencies

Last Mod: 30 Nisan 2010, 15:20
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