Lucas Padademos flies to meet eurozone finance ministers as Germany continues to dig heels in over latest rescue package
The Greek prime minister, Lucas Papademos, is to hold last-minute talks with eurozone finance ministers on Monday to ensure his near-bankrupt country finally secures a vital ?130bn bailout and avoids a default on its debts that could put the single currency at risk.
Papademos's unexpected flight to Brussels yesterday came as Germany continued to dig its heels in over the latest rescue package for Greece at a top-level meeting of senior EU and European Central Bank officials.
Wolfgang Sch�uble, the German finance minister and focus of mounting Greek fury at austerity measures imposed on Greece, accused Athens of rejecting offers of help in rebuilding its shattered economy and of dragging its feet on reforms.
The German economic ministry, according to the paper Welt am Sonntag, has drawn up a "sobering" report on what it sees as Greece's failure to make implementing reforms its priority, and has called for greater co-operation with Brussels as a pre-condition for approving the bailout.
Papademos is to be on hand to assure sceptics that his government can deliver on these planned reforms and iron out final technical details of the package.
Greece has to repay ?14.5bn of debt by 20 March or risk default. Some believe that a Greek default can be contained without risk of contagion to other countries such as Spain or Italy, but others insist it would create a financial tsunami through bank runs, deeper recession and intolerable unemployment across Europe.
Until his surprise visit to Brussels was announced, Papademos thought he was virtually certain to win the backing of the eurogroup of finance ministers, after gaining cabinet approval for a further ?325m savings, including pension cuts, in a ?3.3bn package of cuts.
The savings package is due to be debated and approved by parliament early this week, with 8 March set as the date when the private bondholders will participate in their part of the Greek bailout. But, as riot police and protesters renewed their acquaintance outside the Greek parliament, it emerged that even the latest savage cuts in spending could reduce national debt to only 125-129% of GDP, rather than the original target of 120% by 2020.
Even so, Maria Fekter, Austrian finance minister and a member of the hardline group around Sch�uble, indicated that the 17 finance ministers would approve the latest rescue package for Greece on Monday. "At the moment it appears it will go exactly this way," she said. "I don't think there is a majority to go a different way because a different way is enormously arduous and costs lots and lots of money."
A senior EU official told Reuters: "I don't see anybody wanting to be responsible for pulling the plug on the deal at this late stage."
Britain's foreign secretary, William Hague, warned that the euro was "built without exits".
"They have to be prepared to take action to stop euros leaving the country, maybe have border controls," Hague said on the BBC's Andrew Marr show.
"They don't have their old currency sitting in the vaults ready to distribute. It's not straightforward to leave the euro."
But the former Labour chancellor Alistair Darling, however, told Scotland on Sunday that Greece was bust and should be allowed to default, describing the austerity imposed on Greece as "sheer lunacy".
The International Monetary Fund ? involved in the bailout of Greece and other countries ? is pleading for new resources to manage the worsening crisis.
On Sunday, Japan and China said they would deal with any formal request from the IMF for extra funds jointly.
Jun Azumi, the Japanese finance minister, who was visiting China, said: "What we agreed on ... is that European countries need to do more, although [the situation], including Greece, is headed in a good direction. We can expect some sort of request from the IMF to those including the United States, Japan and China. We agreed that Japan and China will co-ordinate closely and jointly respond to IMF."
Source: http://www.guardian.co.uk/world/2012/feb/19/greece-bailout-talks-papademos-brussels
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