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European leaders spar over Greece bailout ahead of EU summit

France, Italy, and Germany are at loggerheads over a possible Greece bailout ahead of what was to be a routine EU summit this Thursday. Greece has threatened to go to the IMF if the EU can't help with the crisis.

By Staff Writer / March 23, 2010

Greek Finance Minister George Papaconstantinou said that Greece will have no difficulty in borrowing money on financial markets on Tuesday. At the coming EU summit, some nations are head-butting over a possible Greece bailout.

Petros Giannakouris/AP

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Paris

The  debt crisis in Greece continues to bring out public, and not always amicable, efforts among European nations to compromise on a Greece bailout plan, ahead of what was to be a routine European Union summit this Thursday – with Germany seeming to hold out on even discussing a crisis that other nations say could harm the euro.

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French and Italian leaders are insisting that the Greek debt crisis be discussed – while German Chancellor Angela Merkel insists that Greek leaders have yet to even officially claim that a bailout is needed.

Greek President George Papandreou, meanwhile, is visibly irritated with Ms. Merkel – whose popularity in Germany seems to rise with every “no” to Greek assistance. He is threatening to go to the International Monetary Fund if the EU can’t help with a crisis that he doesn’t want to call a crisis, for fear of further attacks on Greek market positions.

Mr. Papandreou has made it clear he wishes the EU summit to end with a eurozone package or plan for Greek aid in order to quiet markets.

The clashes are new instances of old European divides, analysts say, exposing disputes over monetary remedies and differing cultural habits – and extending in some ways to differing ideas about Europe and the dispensation of the common currency, the euro.

France, Italy, and EU commissioner Jose Manuel Barroso are pushing for a remedy, or progress toward a remedy, on Thursday, as new plans were being floated to combine a European and an IMF bailout.

“The French position is very clear," said French Foreign Minister Bernard Kouchner. "We cannot, we must not, abandon our Greek friends."

“Couldn't the stronger countries do a little?" asked French Finance Minister Christine Lagarde last week.

Hans-Peter Friedrich, an influential member of Germany’s Bavarian Christian Social Union, which is affiliated with Merkel’s Christian Democrats, offered a view consistent with the more than 60 percent of Germans who oppose a bailout of Greece, saying that Merkel was right to “not let herself be forced into any concessions.”

Merkel surprised many in Europe early last week in a reversal of position, saying she was not opposed to the southern European nation going to the IMF – an outcome considered something of an embarrassment and potentially harmful to the euro’s standing, which has been dropping in relation to the dollar.

Greece has some 27 billion euros in debt it must finance by a date in May.

European Central Bank opposition

Joining Merkel in opposition to a straight-up Greek bailout this week is European Central Banking chief Jean-Claude Trichet, who said, “There shouldn’t be any subsidy element, no concessionary element” in a potential loan to Greece.

But Mr. Barroso, known mainly as a conciliatory figure inside EU politics, nonetheless put forward a challenge directly to the German position, saying, "We need a decision at this summit…. We can't keep going this way, We risk endangering the stability of the eurozone and feeding speculation."

The possibility of a “two-track” solution of IMF and EU aid was given a partial nod yesterday by Jean-Claude Juncker, head of eurozone finance ministers, who said it would “not be a scandal” if part of an aid package for Greece came from the IMF.

“I cannot ignore the fact that there are some reasons why the IMF should be included in the solution, but it should be done on the basis of European rules,” Mr. Juncker said.
 

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