A FURTHER decline in the value of the euro intensified pressure on the European authorities to spell out how they would provide emergency aid to the beleaguered Greek government.
Amid divisions between major European governments about the nature and scope of any intervention, Greek prime minister George Papandreou said on national television that his country had become “a guinea pig in a battle between Europe and the international markets”.
Doubt about Mr Papandreou’s capacity to find an internal solution to the debt crisis rose after new data showed the Greek economy contracted more than feared in last quarter and the government sharply revised down its figures for the previous three quarters as well.
Although the EU authorities continue to stress that Greece has not sought aid, Mr Papandreou himself indicated that bickering among EU bodies had delayed support for his country.
“There was a lack of co-ordination among the various bodies of the EU. The Commission, the member states, the ECB, and even differences of opinion within these bodies,” he said.
His remarks illustrate the extent of residual divisions after EU leaders broke new ground on Thursday to pledge exceptional support for Greece “if needed”.
Although the absence of clarity over any bailout mechanism has been blamed for the euro’s continued decline, pressure on the currency was fanned by weak economic figures from Germany and the wider EU.
The euro slid as far as 1.2 per cent to hit a nine-month low against the dollar, but pared back some of those losses later.
The markets expect to hear detail about the proposed rescue scheme for Greece after a key meeting of euro-zone finance ministers on Monday night.
However, sources briefed on talks behind the scenes say likely bailout participants such as France and Germany remain far apart.
Even if agreement is reached as to the mode of any intervention, separate sources indicated that the details may not be made public.
At a follow-on meeting on Tuesday, all EU finance ministers will sign off on a new austerity plan from Mr Papandreou.
However, a demand from Brussels for deeper cuts now appears likely.
“I call on the Greek government to do whatever is necessary, including adopting additional measures, to ensure that the ambitious targets set in the updated stability programme, in particular the 4 per cent reduction of public finance deficit in 2010, are reached,” said Olli Rehn, the EU’s new economics commissioner.
