France, Germany back Greece as it vows to keep bailout terms

14th September 2011, Comments 0 comments

France and Germany said Wednesday they were convinced that debt-ridden Greece's future lay in the eurozone, as Athens vowed to stick to the harsh austerity measures required to get an EU bailout.

The statements came after Greek Prime Minister George Papandreou held a teleconference with German Chancellor Angela Merkel and French President Nicolas Sarkozy on his nation's debt crisis.

Sarkozy and Merkel "are convinced that the future of Greece is in the eurozone," the French president's office said in a statement.

"The Greek prime minister confirmed his absolute determination to put in place all the necessary measures to carry out all of the commitements made," it added.

The teleconference was held with markets in turmoil on rising fears of the insolvency of Greece or even an inglorious exit from the eurozone, stemming from its ongoing troubles to apply an EU-IMF recovery plan.

Athens has been warned that failure to overhaul its economy could cost vital funds out of an 110-billion-euro ($150-billion) EU-IMF bailout that rescued it from bankruptcy last year.

A failure to unlock some eight billion euros in rescue loans see Athens run out of cash next month.

A new 159-billion-euro lifeline from the EU currently hangs in the balance as well, with a number of eurozone members expressing frustration with the Greek government's delay in enacting and implementing agreed reforms.

And there is uncertainty whether enough banks will express interest in an initiative to ease Greece's huge debt burden by agreeing to exchange maturing bonds with longer-term obligations.

Talks in Poland between EU and eurozone finance ministers and central bankers on Friday could prove decisive in breaking deadlock in Europe over a demand for Greek collateral made by Finland.

The demand was made as a condition for its approving the new EU bailout.

Merkel this week sought to ease fears over Greece, saying the 17-country eurozone had to stick together and that an "uncontrolled insolvency" must be avoided.

She also urged officials to choose their words cautiously, after markets went into free fall Monday after comments from German policymakers that an orderly insolvency for Greece or even a eurozone exit was possible.


© 2011 AFP

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