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Greece hopes the EU will compound its debt

09 February 2010 / 10:02:11  GRReporter
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Greeks sincerely hope that the European Union will call for the remission of the large debt of the country. The first payment of the debt is due in late April and until then PM Giorgos Papandreou is taking a massive campaign in search of grace from Brussels. At Wednesday, February 10, he will meet in Paris with French President Nicolas Sarkozy to lobby on the need for forgiveness on at least part of the Greek government debt. On Thursday, February 11, the Greek economy will be the central theme of the summit of the 27 European Union countries. 

For several weeks now the message given by the Greek prime minister is that the ultimate objective of international investors, who according to him are playing against his country, is not to destroy Greece, but to destroy the entire eurozone. Papandreou sent a series of warnings from various forums, from the World Economic Forum in Davos to the Economist magazine conference in Athens, that Greece's inability to service its large debt will have a domino effect on other "poor" countries in the eurozone. The hidden meaning is clear - help Greece survive in order for the eurozone not to collapse. 

"Eurozone countries face no risk of “contagion” from the debt and deficit crises afflicting Greece, Portugal and Spain," is certain the Chairman of Fitch credit rating agency, Marc Ladreit de Lacharriere agency in an interview for Europe 1 radio. Recently, Fitch lowered the credit rating of Greece from A- to BBB+ and caused great concern among international markets in terms of the country's ability to recover its loans. "Is Greece capable of taking steps to improve the situation?", asks rhetorically Marc Ladreit de Lacharriere and replies: "There are doubts because Greece has never really followed directives coming from Europe. They have never respected the European Union’s monetary and economic stability pacts.” 

Seemingly supporting his words the Athens Stock Exchange began the week by closing with 1 806.40 points and marked a daily fall of 3.86%. Obviously, investors are in panic of the possibility of Greece requiring foreign aid, especially from the European Union, in order to avoid state bankruptcy. Again, the biggest fall was of Greek bank stocks by 6.82% and producers of raw materials by 6.47%. 

Critical of the Greek economy is also Professor of International Economic Relations in Geneva Charles Wyplosz (on the photo), who concludes that Brussels is not in a hurry to help Greece, because for 30 years the country has been refusing to improve its public finances, as well the fact that it provided the European Union with adjusted statistics. According to him, however, difficulties in Greece will begin if the country fails to service its external debt, which it must start doing by the end of April. However, Charles Wyplosz assessed as minimal the chances of this happening in a country member of the European Union. 

Meanwhile, Reuters quoted analysts who do not exclude the possibility that during crisis some countries can leave the eurozone. According to them, the eurozone is going through its worst crisis since its creation 11 years ago and it is very likely that its weakest members will not be able to support the currency and budget conditions for membership. 

Tags: Fitch Economy in Greece bankruptcy
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