Greece - EU

Eurozone leaders look to IMF for Greek bail-out

Greece's Prime Minister George Papandreou arrives in Brussels ahead of a European Union leaders summit in Brussels on 25 March
Greece's Prime Minister George Papandreou arrives in Brussels ahead of a European Union leaders summit in Brussels on 25 March Reuters

Ahead of a European Union summit on the eurozone crisis, Spanish Prime Minister Jose Luis Rodriguez Zapatero has said International Monetary Fund (IMF) involvement would be an "acceptable" solution for Greece. Earlier Greek Prime Minister George Papandreou urged EU leaders to stabilise the currency, which is being weighed down by his country’s debt problems.


Both premiers were speaking after disagreement among EU member states on whether the IMF should intervene to assist Greece.

German Chancellor Angela Merkel, who is opposed to an EU bail-out, has also backed the IMF's involvement. However she said it should be called upon "only as a last resort".

However, some other member countries, as well as the European Central Bank, favour an EU-led solution. They feel such an approach would prevent further weakening of the euro and is needed to preserve the credibility of the eurozone.

However, Zapatero, whose country currently holds the EU presidency, said he hopes a deal to help Greece can be struck during the two-day meeting in Brussels that begins on Thursday.

"I am confident we are going to get it - we have to. I believe we will find
a solution to guarantee the euro's stability," he said.

Analysis: Alexander Law, chief economist at Xerfi

The EU's single currency hit a 10-month low against the dollar on Thursday and Papandreou said the EU summit would be hugely important.

"Today the challenge is a European one, for making sure we fortify the eurozone, we strengthen the euro and we stabilise the euro currency," he said.

Papandreou maintained that Greece was now "on a positive track" and that his country would "move ahead in a positive manner and in the right direction", regardless of the outcome of the meeting in the Belgian capital.

Greece is burdened by a debt of almost 300 billion euros and has had to cut a public deficit of 12.7 per cent, which is four times the EU limit.

Alexander Law, chief economist with Paris-based economic research institute Xerfi, belives a compromise resolution is likely to be decided upon by European leaders. 

"We’ve had a few weeks of sniping between Greece and Germany, France and Greece, Germany and France themselves, so we’re probably going to head towards a two-tier settlement," he told RFI.

"We're probably going to have to accept the International Monetary Fund’s intervention to sort out the Greek problem but then a second tier settlement, whereby the European Union or at least the eurozone will try and help out financially also Greece, because the last thing we need is that there are further divsions in the euro area."

He said if EU countries presented a united front it could prevent a further run on the ailing currency.

"If we manage to get to a consensus, if we manage to get out a joint statement which no one inside the euro area criticises, we’ll probably see this pressure on the euro subsiding.

"The worst that could happen would be if there was no agreement and that we still don’t know how we’re going to try and salvage this mess and try and get Greece out of the mire."

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