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Europe

Greek PM in Paris to seek Sarkozy's support for debt crisis

Video by Yuka ROYER , Valérie DEFERT

Text by News Wires

Latest update : 2010-03-07

Greek Prime Minister George Papandreou (pictured) arrives in Paris for talks Sunday with French President Nicolas Sarkozy after the French leader vowed to help Greece recover from a debt crisis that has threatened the euro's stability.

AFP - Greek Prime Minister George Papandreou on Sunday sought French support after Athens adopted new austerity measures to steer the debt-crippled country away from financial ruin.

Following talks in Berlin, Papandreou traveled to Paris where he could expect a sympathetic ear from President Nicolas Sarkozy who has asserted that Greece's eurozone partners had no choice but to support Athens.

"We cannot allow a country in the eurozone to fall," Sarkozy said Saturday on the eve of the Elysee meeting with Papandreou, the second round of talks between the leaders on the Greek debt crisis in less than a month.

"If we do not support Greece -- because it is making efforts -- then it wasn't worth introducing the euro," Sarkozy said.

Papandreou was to meet Sarkozy at 1700 GMT and a joint news conference was scheduled to be held after the talks.

After Paris, Papandreou flies to Washington on Tuesday to seek backing from US President Barack Obama.

German Chancellor Angela Merkel and other EU leaders have so far been reluctant to consider a bailout for Greece, which desperately needs to come up with 20 billion euros (27 billion dollars) by May to refinance debt.

Overall, Greece is looking at borrowing more than 50 billion euros this year.

On Friday, the Greek parliament approved a third round of austerity measures to rein in state spending, triggering violent protests and clashes with police in Athens.

Europe's biggest economy, Germany is widely seen as the most likely candidate to help prevent a Greek default, which would be disastrous for the eurozone.

After talks with the Greek prime minister on Friday, Merkel said that Greece does not need financial aid at present and that the stability of the eurozone was "assured".

Papandreou told Germany's Frankfurter Allgemeine newspaper he was "not asking for money" but other forms of solidarity, warning he might otherwise go to the International Monetary Fund.

That threat has raised eyebrows in European capitals and former French Socialist prime minister Laurent Fabius warned Sunday that if Greece were forced to turn to the IMF, that would be a "major failure for Europe".

Athens has promised the European Union that it will reduce its public deficit in 2010 by four percentage points from its current 12.7 percent of gross domestic product.

But two previous rounds of austerity measures failed to convince the financial markets that Greece would pull out of the red.

On the eve of the third series of spending cuts however, Athens successfully raised five billion euros in borrowings on the international bonds market, although these were offered at yields of more than six percent.

A Greek official told AFP that Papandreou's tour of European capitals was to "reassert that Greece has done its share and that it is now up to Europe to do its part".

French Finance Minister Christine Lagarde said the latest austerity plan contained "solid and concrete" measures and praised the Greek government for showing "realism and clear-headedness".

"The commitments taken by the Greek government are clearly paving the way towards an exit" from its debt and deficit crisis, said Luxembourg Prime Minister Jean-Claude Juncker, who heads the 16-nation Eurogroup club of the currency zone's finance ministers on Friday.

Date created : 2010-03-07

  • ANALYSIS

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  • GREECE

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