NEWS

Papandreou in Paris to argue Greek case with Sarkozy

Greece’s Prime Minister George Papandreou brought his campaign to save his economy to Paris on Friday as nervous markets turned their attention to a key international audit of Greek finances.

The Greek premier was to hold talks with France’s President Nicolas Sarkozy, a day after German lawmakers threw the ailing eurozone a lifeline by agreeing to boost the bloc’s 440-billion-euro bailout fund.

The plan received fresh impetus from Austria, which became the 14th of 17 eurozone members to approve the funds and the European Commission, which urged possible hold-out Slovakia to move quickly to add its name to the deal.

France will be one of the key contributors to the expanded fund while its own banks are critically exposed to sovereign debt from Greece and other weak links in the eurozone chain — Italy, Spain and Portugal.

Meanwhile, in Athens, officials from the European Union, European Central Bank and International Monetary Fund are conducting an audit to decide whether to disburse 8 billion euros of crucial aid for Greece.

Payments depend on whether the EU-ECB-IMF troika of creditors, who got to work on Thursday studying Greek government accounts, agree that Papandreou’s harsh austerity plans go far enough to clean up Greece’s books.

The audit is open-ended but the experts are expected to report before G20 finance ministers meet in Paris on October 14 and 15. France holds the G20 rotating presidency and will want a plan in place to reassure the markets.

A spokesman for the German finance ministry said negotiators were close to agreeing a deal to assuage Finnish concerns about Greece’s reforms. Finland has held out against further bail-outs without more guarantees on spending.

Papandreou was in Poland en route to Paris and met EU president Herman van Rompuy to discuss the build up to a second crucial mid-month meeting — the October 18 eurozone summit in Brussels, officials said.

France’s concern is not just to maintain the stability of the eurozone but also to protect its own banks, which are seen as overexposed to risky debt from Mediterranean countries and short of liquidity.

“After the meeting with Mr Papandreou I will have the opportunity … to say exactly what our strategy is in terms of the support that we owe to a European country like Greece,» Sarkozy said in a statement.

[AFP]