cnn latest news: Eurozone delays Greece decision

Tuesday, June 21, 2011

Eurozone delays Greece decision

Greece's new Finance Minister Evangelos Venizelos arrives for the meeting of eurozone finance ministers

Greece's new Finance Minister Evangelos Venizelos said the country could meet its targets

Eurozone finance ministers are meeting in Luxembourg, where they are expected to approve a 12bn-euro (£10bn) loan to debt-stricken Greece.

The loan is the latest tranche of a 110bn-euro EU and IMF aid package.

The finance chiefs are also expected to discuss a second bail-out for Greece. PM George Papandreou confirmed that talks were taking place about a new deal "roughly equal" to the first.

Mr Papandreou urged a "national accord" in parliament to deal with the crisis.

"I have asked for a renewal of confidence in the government, because the country finds itself at a crucial point," he told parliament, at the start of three days of debate.

Mr Papandreou reshuffled his cabinet on Friday, with former Defence Minister Evangelos Venizelos replacing George Papaconstantinou as Finance Minister.

Arriving at the Luxembourg meeting, Mr Venizelos said Greece remained fully committed to the EU/IMF financial aid programme and achieving its targets.

"It is a great opportunity for me to repeat the strong commitment of the Greek government and the strong will of the Greek people for the implementation of the programme," he told reporters.

Analysis

Even if there is another bail-out of around 110bn euros, Greeks have lost faith in the plan. All they see is debt piling on debt.

This is where the danger lies. A creeping despair. Injured national pride. Ten years of austerity.

Even so the bet must be that the Greeks reluctantly, sullenly, will go along with new austerity but I have sensed a despair that last year just wasn't there and no-one knows where that will lead.

Read Gavin's thoughts in full

"We can achieve our target, thanks to the efforts of our people, and thanks to the co-operation and the assistance of our partners."

In May last year, the EU and IMF agreed to lend Greece 110bn euros, but the loan is conditional on the government implementing a series of painful domestic reforms which have sparked nationwide strikes, rallies and violent riots on the streets of Athens.

Greece needs the latest tranche to avoid defaulting on its looming debts.

Mr Papandreou told parliament the country would soon run out of money if politicians did not take action.

The prime minister said his priority was "a national accord to tackle the Greek debt and deficit which are a national problem", warning that the image of disunity was damaging the country's reputation.

Greek bail-out timelineMay 2010: EU and IMF agree bail-out package to prevent Greece defaulting on its debts; in return, Greece agrees to make 30bn euros of budget cuts over the next three yearsFebruary 2011: EU and IMF experts tell Greece it must make further cuts to keep recovery on trackApril 2011: EU figures reveal Greek deficit revised up to 10.5%, worse than previously thoughtMay 2011: Greece begins privatisation programme but is warned the IMF may not release more funds as Athens cannot guarantee it will remain solvent for next 12 months29 June 2011: Deadline for Greece to agree new austerity packageQ&A: Greek debt crisis Viewpoint: Politics of Greek crisis

But he also said a reform of the political system was needed, and proposed a referendum later this year on possible changes to the constitution.

However, opposition politicians who oppose the government's austerity plans rejected Mr Papandreou's appeal and asked why the public should be asked to make sacrifices in vain.

There were calls for Mr Papandreou to resign and call elections.

The BBC's Chris Morris said Mr Papandreou's speech was intended to appeal to parliament, the Greek public and the public across the eurozone.

The prime minister does not want to be appear to be doing nothing in a crisis, says our correspondent.

But what public support there was for the austerity plans appears to be fading, with a recent poll suggesting the majority of people now oppose it.

Many critics say the country should just default, but doing so would raise the cost of borrowing for other struggling eurozone countries, forcing them to default in turn.