Greek FM says European debt deal is 'attainable'

By Nicholas Paphitis

Associated Press

Published: Monday, July 18 2011 3:31 p.m. MDT

Greek finance minister Evangelos Venizelos speaks during an interview with The Associated Press at his office in Athens, Monday, July 18, 2011. Venizelos says a European debt deal is "attainable" at the European Union summit on Thursday.

Dimitri Messinis, Associated Press

ATHENS, Greece — A European debt deal is attainable at Tuesday's EU summit, Greece's finance minister said, insisting that his country remains on course to reach a primary budget surplus next year, despite missing fiscal targets so far in 2011.

Evangelos Venizelos also told The Associated Press in an interview on Monday that Greece is hoping to avoid being placed under selective default by ratings agencies — an assessment that could plunge Europe's worsening debt crisis into greater turbulence.

Greece is enacting major economic reforms alongside an austerity program as it grapples with a national debt topping €340 billion ($477.5 billion) that nearly saw it go bankrupt earlier this month.

Leaders of countries that use the euro are to attend the emergency talks in Brussels on Thursday, amid fears the fallout from Greece's woes could spread to larger European countries. Borrowing costs in eurozone members Italy and Spain have risen alarmingly in recent days.

"Reaching a solution is attainable because this solution does not only include Greece," Venizelos said in his office. "At issue is the euro and the resilience of the eurozone. That is why protection of Greece is a self defense mechanism for the eurozone. That will help us avoid a domino effect."

Greece is being kept afloat by €110 billion in emergency loans from other eurozone members and the International Monetary Fund, but remains locked out of bond markets by high interest rates and will require a second bailout expected to involve a similar amount.

"We want a solution that makes our national debt sustainable ... guarantees Greece's borrowing needs until in mid-2014 when we foresee our return to the markets, and guarantees the liquidity of Greek banks," Venizelos said.

A new bailout deal is likely to involve banks and other Greek bondholders making voluntary contributions to deferring Athens' debt payments. Details of that potential arrangement are being negotiated at talks between European Union officials and private investors in Rome.

Proposals being considered already "combine all the different approaches" in a way acceptable to Greece, Venizelos said.

"I believe we will be able ... to achieve something which will be secure, positive for the viability of the public debt, and will safeguard Greece as a country and the Greek banking system," he said.

Venizelos said Greece had already taken the toughest measures needed to steer the economy back to fiscal health.

The Socialist government has faced months of anti-austerity protests, and has seen a recent slump in popularity and struggling with unemployment that topped 16 percent in March.

In the latest sign of public discontent, striking taxi drivers blocked roads to the country's main airport and harbor Monday as part of a two-day strike, which is occurring at the heart of the vital tourist season. They were protesting proposed changes in licensing laws that would make it cheaper to operate a taxi.

Hundreds of taxi drivers later drove to Parliament in central Athens, honking their horns, shouting slogans and creating major traffic jams on one of the hottest days of the summer.

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