EU offers help but no specific money pledge

The European Union yesterday pledged political and moral, if not necessarily financial, support for Greece in a bid to ringfence the country’s economy and the eurozone from speculators as Prime Minister George Papandreou insisted that his government is not looking for an injection of cash from abroad. In an unprecedented step, EU President Herman Van Rompuy and European Commission chief Jose Manuel Barroso announced in Brussels that the leaders of the 27-nation bloc had agreed to back Greece and face down the markets. «Euro area member states will take determined and coordinated action, if needed, to safeguard financial stability in the euro area as a whole,» read the joint statement, which also expressed full support for «the efforts of the Greek government and their commitment to do whatever is necessary» to get its public finances in order. Van Rompuy, chairing his first leaders’ summit, said the move was an expression of «crystal-clear political will» to support Greece but also to ensure it takes the appropriate measures to reduce its deficit and debt, through a monthly monitoring program. Barroso said that the statement was designed to end speculation that Greece would require a bailout package, saying that such «scenarios are so far not present,» while adding, «The Greek government believed they do not need financial support.» There was no discussion about what form any financial bailout might take but there was speculation about a range of options, including bilateral loans, extending lines of credit within the eurozone, guaranteeing Greece’s loans, releasing EU funding early or even issuing eurobonds. Papandreou welcomed the EU’s commitment but stressed that Greece could solve its fiscal problem on it its own. «Today, the EU conveyed a crystal-clear message to the market,» he said before stressing that Greece had «never asked for any help» and would «not be needing help» in the future. Greece is aiming to reduce its deficit by 4 percent of GDP this year, largely through cuts in public spending and an increase in some taxes. However, Papandreou said that he would not shy from adopting more measures if they are needed. «If it is necessary, we are committed to take additional measures to achieve our targets,» he said. «Greece is facing very serious challenges due to very costly mistakes of the past.»

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