Prime Minister George Papandreou is breathing a little easier. His fellow leaders of the 16 Euro currency states have agreed to support Greece in its debt crisis.
The aid strategy is the first bailing out of a euro member since the currency’s introduction, 11 years ago. The deal came after a meeting including top euro and EU officials, in Brussels.
European Council President Herman van Rompuy made this formal announcement: “All euro area members must conduct sound national policies in line with the agreed rules. They have a shared responsibility for the financial and economic stability in the area. In this context, we fully support the efforts of the Greek government and their commitment to do whatever is necessary, including adopting additional measures to ensure that the ambitious targets set in the stability programme for 2010 and the following years are met.”
Athens needs to borrow 53 billion euros this year to cover its 12.7% deficit and to refinance its debts.
The EU wants this done without relying on the International Monetary Fund.
If left unchecked, it was feared the Greek problem might create a vortex for other high-debt, rising deficit euro-zone countries, such as Spain or Italy.
Van Rompuy said Athens had to implement all agreed deficit-cutting measures to reduce its budget gap by 4 percent this year.
How the support policy is put into practice will now be worked out in detail.
Accusing their socialist government of treachery, ordinary Greeks fear they will bear the brunt of any austerity plan.