Greece appealed on Friday for tens of billions of euros in unprecedented help from the EU and IMF to end its debt crisis, but Germany said that aid would only come if the euro was threatened.
Greek Prime Minister George Papandreou told Greeks in a televised speech that the aid was a “national need” after the previous conservative government had left the country a “sinking ship.”
Greek Finance Minister George Papaconstantinou said he expected no problem in getting the aid and that it should be available in “a few days.”
However, German Chancellor Angela Merkel, whose government has been reluctant to help Greece, declared that the rescue package would be activated only if the stability of the euro were threatened and Athens implemented tough policies.
Merkel spoke after the EU said it did not see any “obstacles” and would give “rapid” treatment to the request to activate a three-year debt rescue worth up to about 45 billion euros (US$60 billion) in the first year at concessionary interest rates of about 5 percent.
IMF head Dominique Strauss-Kahn said the fund would “move expeditiously.”
The Greek debt drama has mushroomed into the biggest crisis in the euro’s 11-year history, sparking concerns that it could spread to other weak members of the single currency area battling runaway deficits and debt.
IMF involvement would also be a first — the fund has helped out other EU members such as Hungary, but the eurozone is supposed to be policed and its rules enforced by the European Central Bank and member states.
Critics have suggested that such an IMF role now undermines the credibility of the eurozone, which faces a make-or-break choice over who actually runs its affairs given perceived differences between Paris and Berlin.
European Commission chief Jose Manuel Barroso said the Greek appeal for aid was “good for Greece and it’s good for the stability of the eurozone.”
Athens’ dramatic appeal removed a big slice of damaging uncertainty in financial markets, but the initial positive impact was muted in turn by concerns, stoked by Merkel’s comments, over how the rescue will be implemented.
“There are still doubts about implementation of the plan while markets will still be concerned about the long-term sustainability of Greece’s public finances,” said Diego Iscaro of the IHS Global Insight consultancy.
“Moreover, the economic situation still remains worrying,” Iscaro said, noting that the Greek economy would shrink 2.6 percent this year after 2 percent last year.
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