Greek crisis
June 24, 2011
European leaders have pledged to do "whatever necessary" in order to prevent a spread of the Greek debt crisis under the condition that Athens enacts a series of stringent austerity measures.
German Chancellor Angela Merkel said on Friday that European leaders had struck "an important political accord for the stabilization of the euro."
At the start of a two-day summit in Brussels on Thursday, leaders had agreed that the situation was very serious; without further outside help, Greece could be bankrupt by July, with disastrous knock-on effects.
Although assistance to Greece's ailing economy was not intended as an official item on the summit agenda, it has already started to dominate the gathering.
The EU leaders reiterated they were ready to offer Greece another 12 billion euros ($17 billion) in loans only if the parliament in Athens agreed to the latest consolidation package, which would legislate some 28 billion euros in tax hikes and spending cuts, as well as privatizations worth some 50 billion euros.
Merkel pointed out that in Portugal and Ireland - the other two countries which have been bailed out - all political parties had joined forces to see through austerity programs.
Greece, she said, should do the same.
"My appeal to the Greek opposition is to act on their historic responsibility," said Merkel.
According to French Foreign Minister Alain Juppe, EU leaders believe European unity is at stake.
"There is a very strong determination among the member states to save what we have done since 50 years all together," said Juppe.
Greece divided
But that might be expecting too much. Conservative Greek opposition leader Antonis Samaras indicated in Brussels that he will not support the austerity package when it comes up for a vote next week.
"The current policy mix implemented by the Socialist government calls for more taxes to an economy in an unprecedented depression," Samaras said.
"This has created obvious problems, as demonstrated by all current figures. We need corrective measures so as to insure that the Greek economy recovers and pays back its debt."
Jean-Claude Juncker, president of the group of countries that share the euro common currency, took these comments with a sense of humor. He said he hadn't had a chance to talk to Samaras yet, as an extensive military parade in his native Luxembourg had delayed his arrival.
That was probably good for Samaras, he added, because otherwise he would have had a very frank word with him.
Juncker dismissed any speculation about alternatives to political cooperation.
"There is no plan B. Greece has to do what needs to be done. If that happens we will do our share," he said.
Debt contagion
EU member countries fear that if the bloc fails to contain the Greek debt crisis it could spread to other euro countries and undermine the whole European financial system.
Europe is no longer alone in its fears. The US, China and the International Monetary Fund have also pushed the EU to take action.
Amidst the gloom, there were also hopeful voices, including one from Swedish Prime Minister Fredrick Reinfeldt.
"My country was in these kinds of troubles in the early 1990s and we worked very hard to reform our economy to get our house in better order, and that's the kind of challenge we now have facing Greece," he said.
That was little consolation to EU leaders, who are likely to see Sweden as being far more disciplined than Greece.
Author: Christoph Hasselbach / slk / dfm
Editor: Martin Kuebler