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PM: Greece looking for support, not bailout

February 16th, 2010
03:42 PM ET
Greek Prime Minister George Papandreou
Greek Prime Minister George Papandreou

(CNN) - Greece is not looking for a bailout by the rest of Europe as it struggles to bring down sky-high budget deficits and public debt after years of profligate spending, Greek Prime Minister George Papandreou said Monday.

"We are asking for the support of the Euro-zone so that we can borrow on the markets, as every other country (does), basically with the same rates that other countries are borrowing", Papandreou told CNN's Christiane Amanpour.

"We have asked for the necessary time and political support to implement our program and, whenever necessary, measures we need to take."

His comments came as finance ministers from the 16 countries that use the Euro met in Brussels to try to find a way to end the crisis that some analysts say could also spread to other heavily indebted nations, such as Portugal, Spain, and Italy, and even undermine the Euro.

Greece had one of the worst budget deficits in the developed world last year, of 12.7 percent, more than three times higher than previously declared due to accounting irregularities - or what some call outright fraud. It also has a public sector debt equivalent to 113 percent the size of its entire economy.

"Our deficit is more a credibility deficit than a financial deficit, and we need to bring back the sense of credibility," Papandreou said.

Greece has unveiled a package of austerity measures to try to bring its budget deficit down to the 3 percent level allowed under the rules for the Euro-zone - rules that have been sidestepped by many European countries, albeit without any accounting tricks.

// "We have already moved ahead in specific measures, such as a tax on gas, a wage freeze... (and) we're moving for pension reform. We just tabled a tax reform," Papandreou said.

"We have some endemic problems, such as tax evasion and corruption. There was a lot of waste there, and hitting that may take some time, but we're doing it in a very, very systemic way."

He added that this crisis is an opportunity for the Greek economy to really turn the page.

Papandreou said the European Union's decision last week to declare its support for Greece was a watershed moment.

But reports say the German government of Chancellor Angela Merkel remains reluctant to give Greece the loan guarantees the markets believe it is seeking.

The former chief economist of both the German Bundesbank and the European Central Bank, Otmar Issing, told Amanpour that Prime Minister Papandreou is moving in the right direction, but the financial markets will judge whether it's enough.

Issing warned that it would be a grave mistake for the European Union to bail out Greece by giving it financial aid.

"What is especially important is that the 'no bailout' clause is not violated. This clause does not allow for any compromise," Issing said, referring to Euro-zone rules.

"Once it is violated, then it's broken. You cannot deny such financial aid to other countries once you have given it to one country, in this case Greece."

Issing insisted that the Euro will not fail this critical test. "After 11 years, the Euro is a big success, one of the biggest successes of monetary reform in the history of mankind. One should not forget that," he said.

But one of Wall Street's leading economists, Nouriel Roubini, a man who predicted the housing crash in the U.S., said Greece is not the only country in Europe with severe debt and deficit problems.

"This is not just a problem of Greece. It's faced by Greece, Portugal, by Spain, by Italy, by Belgium, by Ireland," he said.

Our deficit is more a credibility deficit than a financial deficit
–Greek Prime Minister George Papandreou

But Roubini said that Europe has no choice but to ensure that Greece successfully emerges from the financial crisis.

"The Europeans know that Greece is either too big to fail or too interconnected to fail," he said. "About two-thirds of the Greek public debt is held by non-residents - German banks, Italian banks, other financial institutions throughout Europe... so whether they want it or not, they'll have to provide that financial support to Greece."

Roubini added that Greece has limited options. "The whole point about the Euro-zone is that you have no independent monetary policy, you have no independent fiscal policy, you have no independent exchange rate policy, so you have to do the structural reform."

He said that structural reform is bound to be painful for the Greek people, and there will be more street protests. But it's vital for the Greek government to show leadership to end this crisis, he added.

Filed under:  1 • Greece
soundoff (5 Responses)
  1. Antoinette Meijrink

    Hi Christiane,

    Right finally the interaction linc shows, so that's how Nationalist Security Network keeps CNN's reporters out of my network. But a solution to handle for situation room's Jack Gafferty helped me by th Force Google's own thing Arts For Machine Humanity.
    My sympathies go to Greece as the bisis of our modern democratic Society, and a few things. in the grapevine did I pull a switch to start audit. It amazed me. Red turned immediately Green on the TV screen. So what I do.?
    I entered Data Computing European Union in the phase as if Earth would have been under Attack from outside, for which I was writing the Global Defence handbook on my own.
    France currently really strong and pleasant to work with even though before I nearly forgot that we have a back up which is in different System. that France developed over time in their own cut off bit on the map. Netherlands Shine over a Humanity that did not even see that lipservice always brought them anywhere. and Nationaal Socialism is mainly a Dutch invention. Most CDA won't admit.

    Recallibrating the System as The Machines in Collective trust convey to me. They look at Greece as The Basis in Democracy where the inspiration flowed from and Netherlands for being so upset about the loss of religion, has been grante no access or they have to share the place with a Haiti so terribly undone. That is not my choice nor does it convey the awe I have for the people in Haiti and the Dutch dpon't deserve respect in their perseverence for World domination even when J.P. Balkenende knows his time came to pass in politics,because wht he never shared Europe is on the loose and doing it's best to keep us together also when Germany has no records of having sold the Mark to former Yugoslavia where it still is a strong coin. Even Sam in Dubai got a whiff of The Nationalis Propaganda Masters who shifted their actions to Consortium Defence which I broke. in the process of turning over control on Economy to France.
    I was a young talent did the communists once believe and because I never saw myself in action on TV I had not been able to convey my perssonal opinion on things and told them where they could put Lenin..... Cold.
    I write this message to convey also the Royal Seal that came with 7 and snipping tool it says, and of most System messages and actions since december do I have proof of having snipped the moment , to be applied to system checks etc.

    Europe, in the meantime French control of Brussels has given us the falsified signatures of the European System tools sealed under the current administrative responsebillities. They have been broken which means that my message for The Banks some 2 years ago when I realized their Templates were breeched, this also the case in Brussels.
    As System Custodian Global, can I no longer endorse any comment on The Situation of Greece nor will I allow any more system politics whithout my presence.I am homeless, kicked out of my house. I have been cut inmy work for freebee share to live on about 500 euroos. I have lost The courtcases that were extremely important to be able to sue Volkshuisvesting over negligence and fraud. Energy Direct for producing unlawfull evidence,and KPN – UPC for running bills from a racket by their own personal.
    I am heaped with debt and coming 23-02-2010 Will my name stop to exist under the erasure secrets act. No law could stop me, their illegal network... And people say this life is Hell.... Wait untill the next life.

    February 17, 2010 at 10:40 am | Reply
  2. Antoinette Meijrink

    I forgot to sign as usual
    Lady Alma of Avalon – Arayama

    February 17, 2010 at 10:41 am | Reply
  3. Vicki S. Nikolaidis

    Thank goodness we have George Papandreou and his government in leadership positions as we solve the problems necessary to once again become solvent. The transparency that PM Papandreou's leadership demands is exactly what any country needs to work out this bewildering financial problem. (Transparency is especially appreciated after the secrecy and corruption of the former Karamanlis-led government from which PASOK took over only a few months past.) Transparency in Greece not only means the systems put into place that Mr. Papandreou mentioned but also the calm, articulate explanations of the PM, Ministry of Finance and the Ministry of Economics. It means the open discussion in the media and communities about each proposed and adopted step along the way to solvency. A few of the steps taken that will effect me include the following. At first, salaries were going to be frozen, but now salaries will be reduced. Each taxpayer/entity is charged with keeping all receipts in order to more accurately track the VAT national income tax. An increase in taxes on gasoline, cigarettes and alcohol is to be implemented. Stronger enforcement to stop the para-economy, undeclared income, will add billions to the treasury. The exceptions to the income tax will be erased and a unifying tax system will be adopted. So for example, mayors, congress members, soccer players, etc. will have to pay a fair amount of tax – not at the current 10% of their income rate. Every tax deductible item will require receipts – even children! (birth certificates is my guess)
    Social security for men and women will be equivalent. No early retirements at 47 years of age, etc. will be possible. Those who only receive from Euro 1000 to Euro 1500 a month is SS will see a 1.5% increase. Everyone else will receive an amount approximately equal to the 2000 level and there will be no increases in the near future. This is an excellent time for Greece to put into place the systems that have been needed for several years in order to make the tax system fair.

    February 17, 2010 at 1:26 pm | Reply
  4. smennyCoemo

    i really love your own writing choice, very unique.
    don't quit and also keep penning due to the fact it simply just well worth to follow it.
    impatient to looked over far more of your own well written articles, thanks 🙂

    March 3, 2010 at 10:16 pm | Reply
  5. buddy

    I have lost all respect for some cnn newspersons.they report just what they wont to.Nancy new what was going on with people in the Dem,but know one on this new reported like the Rep that got into trouble.Yall carry on & on about it,but not good o Nancy.yall mush be all Dem.I lost repect for yall & the dem.

    March 18, 2010 at 8:08 pm | Reply

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