Greece: Europe Tries to Contain the Economic Crisis

Aysegül Er writes for EA:

As the shock of the ongoing financial crisis in Greece spreads through almost all of Europe, tensions are rising. On Friday, Greek Prime Minister George Papandreou criticized the European Union's response to his country's financial requirements as timid and too slow. Papandreou claimed that EU institutions, the European Commission, member states, and the European Central Bank have failed to coordinate over the crisis and have undermined Greece’s credibility.

EU leaders maintain that Greece must take further measures to overcome its huge debts and should cut its budget deficit, which at 12.7 percent is four times higher than the upper limit set in the Eurozone, by 4 percent this year.


Papandreou said after the Brussels summit that his country was ready to take the extra action needed to reduce its deficit. “I think that political will is very clear,” he asserted, “Let us allow for the instrumentation to be something as a theoretical discussion, because we hope we will not be there because we are ready to take all the measures as well as Europe in order to be credible and to have a credible exit out of this crisis.”

EU ministers subsequently considered exceptional steps and coordinated action, if needed, to safeguard financial stability in the Euro-area. The EU Commissioner for Economic and Monetary Affairs Olli Rehn said, "Our view is that risks are materializing, and therefore there is a clear case for additional measures.” The European Commission approved the Greek austerity plan and agreed to work with the European Central Bank to monitor Athens.

Greek Finance Minister George Papaconstantinou denied that his country needed to take further austerity measures to cut its debt. He said, “My guess is that what will stop markets attacking Greece at the moment is a further more explicit message that makes operational what has been decided at the European Council." He pondered, “If we announce today new measures, will that stop markets attacking Greece?” but he then assured, “If additional fiscal measures are needed, we will take them.”