Shift in support for Athens

After yet another day of frenzied speculation about the prospects of debt-ridden Greece in the eurozone, top European and US government officials appeared to coordinate their efforts to douse rumors of a default and a teleconference call was hastily arranged for this evening between Prime Minister George Papandreou, French President Nicolas Sarkozy and German Chancellor Angela Merkel.

The radical shift in support for Greece followed the intervention of US President Barack Obama, who pressed the leaders of the European Union?s larger countries to show leadership as rumors sent global markets into a tailspin and the pressure rose on Italy, which is largely regarded as too big to fail.

A meeting between Sarkozy and European Council President Herman Van Rompuy in Paris Tuesday was believed to have focused on the Greek crisis but it was Merkel who publicly stressed the importance of concerted action to avert a broader problem.

?We must always keep in view that we do everything in a controlled way, that we know the consequences, because otherwise a situation could very quickly arise in the eurozone that none of us wants and that could have very, very difficult consequences for us all,? Merkel was quoted as telling a German radio station.

Her comments came a day after those by German Economy Minister Philipp Roesler, who indicated that a Greek default should not be ruled out as an option.

The mixed messages being sent out by the German government were the subject of scathing commentaries in the German press Tuesday.

In Athens, Papandreou and Finance Minister Evangelos Venizelos discussed the developments in Paris, Brussels and Berlin. Ahead of his conference call with Merkel and Sarkozy, which is scheduled for 7 p.m. Wednesday, Papandreou is to chair an emergency cabinet meeting. It is expected that, during the call, Papandreou will outline his government?s timetable for an ambitious privatization scheme and detail its plans to slash public sector spending.

He is also expected to urge the two EU leaders to press French and German banks into joining the private sector involvement (PSI) arm of a second bailout deal for Greece hammered out in Brussels in July.