Greece urges EU to deliver on rescue pledge

By Derek Gatopoulos

Associated Press

Published: Friday, July 1 2011 5:15 a.m. MDT

A protester shouts a slogan as she waves the Greek flag during a protest outside the Parliament in Athens, Thursday, June 30, 2011. Global stocks pushed higher once again on Thursday after Greece cleared the final hurdle required to get bailout cash needed to avert a potential debt default next month.

Thanassis Stavrakis, Associated Press

VOULIAGMENI, Greece — Greece has done its part and now the European Union must provide more rescue loans, Greece's prime minister declared Friday after days of anti-austerity riots in Athens and fierce political battles in parliament.

George Papandreou described votes this week to implement measures worth €28 billion ($40 billion) in savings and €50 billion ($72 billion) in government asset sales as "patriotic decisions to save our country."

"Greece has delivered on a very difficult challenge, so it is time for Europe — but also the world — to also deliver," Papandreou told an international conference of Socialists meeting at a seaside resort near Athens.

Creditors from the EU and the International Monetary Fund who rescued Greece from default had demanded the new measures before they would give Greece its next bailout loan or consider a second massive bailout for the debt-ridden nation. Greece would have defaulted on its debts this month without the €12 billion ($17 billion) installment.

In a surprise move, the eurozone's 17 finance ministers canceled a meeting Sunday in Brussels to sign off on the Greek funds but converted it to a teleconference on Saturday evening. Several officials said the group needed more time to nail down the details of a second bailout for Greece.

"It would have been too ambitious to get the deal (on a second package of rescue loans) done by Sunday," said one eurozone official, who said the ministers would discuss the second Greek bailout at a meeting July 11.

He spoke on condition of anonymity because of the sensitivity of the talks.

A second eurozone official said while the cornerstones of the second Greek bailout would have to be drawn up soon, it may not be finalized until the next Greek loan installment is due in September. That official also spoke on condition of anonymity.

Markets — fearing the consequences of a Greek collapse on Europe — breathed a global sigh of relief Thursday as Papandreou saw the new cost-cutting through.

But even if Greece gets through the next hurdle in September, there are still real worries that it will end up eventually having to restructure its debts — negotiating longer repayment times or giving creditors less than the full amount owed. Many economists believe Greece will ultimately have to default at some point, saying its €340 billion ($491 billion) debt is just too big for a country of only 11 million people to handle.

Last year's €110 billion ($159 billion) bailout was predicated on Greece being able to tap bond market investors for cash next year, but with the country's interest rates at exorbitant levels, that looks highly unlikely. The second bailout is expected to be about the same amount.

Papandreou condemned the anti-austerity riots this week that left more than 300 people injured but said he understood peaceful demonstrators' need to voice opposition to decades of "injustice."

"We are living in Greece through very rough — extremely rough — times. And this means that democratic governments must make hard choices in the name of protecting their people and moving their societies forward," he said Friday.

The latest austerity program imposes a barrage of new taxes and spending cuts over five years, stripping protections from many low-income Greeks.

The prime minister also urged governments in developed countries to work together to limit the influence of credit ratings agencies and giant financial institutions.

"If the ratings agencies come and downgrade us one more notch, then they will have more power in their decisions than the Greek people and Greek parliamentarians," he said to applause from Socialist delegates. "And that is unacceptable if you want to have a democratic world."

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Gabriele Steinhauser in Brussels contributed.

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