Merkel says Greek vote 'very good news'

29th June 2011, Comments 0 comments

German Chancellor Angela Merkel believes a Greek parliamentary vote Wednesday approving emergency austerity measures is "very good news", her spokesman said.

Amid angry street protests, MPs voted in favour of 28.4 billion euros ($40 billion) in spending cuts by 2015, unlocking 12 billion euros in emergency funding from the European Union and the International Monetary Fund.

The short reaction from Merkel's spokesman Steffen Seibert was released on microblogging website Twitter.

The funds represent the fifth tranche of a 110-billion-euro aid package agreed last year with the EU and the IMF, and are needed to prevent Greece defaulting on its mammoth debts.

Such a default could have grave consequences not only for the 17-nation eurozone, something which Germany was a driving force in creating, but also for the global financial system.

Some observers have likened it to the late 2008 collapse of US investment banking giant Lehman Brothers, the single event which more than any other triggered the world's worst financial crisis since the 1930s.

Greece's first bailout went down badly in Germany, Europe's main paymaster, with voters resentful of their taxes being used to pay for what they saw as others' mistakes and the EU becoming what critics called a "transfer union".

With Athens now looking for a second package of almost the same size, Merkel wants private investors to take part in the rescue, but there are fears that rating agencies will see this as non-voluntary and declare Greece in default.

© 2011 AFP

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