French and German leaders emphasized during a teleconference call with Prime Minister George Papandreou on Wednesday that Greece remains an ?integral part of the eurozone? despite feverish media speculation about the country?s imminent default, government spokesman Ilias Mossialos said late Wednesday night.
?Despite the recent rumors, all sides emphasized that Greece will remain in the eurozone,? Mossialos told state TV channel NET.
He added that German Chancellor Angela Merkel and French President Nicolas Sarkozy had expressed their conviction that new austerity measures announced by the Greek government over the weekend – chiefly a new tax on property – would ensure the country meets deficit reduction targets set by its international creditors and secures a sixth installment of emergency funding on which the country?s solvency depends.
According to sources, Papandreou reassured Merkel and Sarkozy during the 25-minute phone call that his administration would do everything possible to speed up reforms voted through Parliament this summer.
In an emergency meeting ahead of the conference call on Wednesday, Papandreou sought to rally his troops, stressing that foreign creditors and markets were watching Greece?s every move.
Earlier in the day, there had been a flurry of diplomacy by US and European officials aimed at sending out a positive message.
European Economic Affairs Commissioner Olli Rehn said that ?a default or exit of Greece from the eurozone would carry dramatic social, economic and political costs… not only for Greece, but also for euro-area member states, other EU states, as well as global partners.?
US Treasury Secretary Timothy Geithner, who is to attend a summit of EU leaders in Poland on Friday, said he was confident that Europe could overcome its debt crisis. ?The people who are concerned that this is beyond their grasp are mistaken. The size and the challenges that they face economically are completely within the capacity of the stronger European members to manage,? he said, adding however that ?they are going to have to do more? and ?move quickly.?
Sarkozy too, ahead of the teleconference call, emphasized that France ?would put everything in place to save Greece? though he expected Athens to make good on its commitments. Merkel is believed to have pressed the same point during the call.