Saturday, 13 February 2010

'Timid' EU Must Not Make Us Fight This Battle Alone, Says Greek Prime Minister

THE GUARDIAN: Lack of united support blamed for creating a pyschology of imminent collapse / Tentative response fails to impress markets as data shows eurozone stagnating

George Papandreou, the Greek prime minister. Photo: The Guardian

George Papandreou, the Greek prime minister, today slammed the EU for displaying "timidity" in its dealings with the country as it grappled with its worst financial crisis in a decade.

In a live address to his cabinet following his return from yesterday's emergency summit in Brussels, the normally mild-mannered leader hit out at the lack of united support from the EU, saying the foot-dragging had exacerbated the load for debt-ridden Greece which has been hammered by markets in recent weeks.

"Greece is not a political or an economic superpower to fight this alone. The EU gave political support in the last few months of this crisis, but in the battle against impressions and the psychology of the market it was at the very least timid."

The union had, he said, been fragmented by multiple voices, differences and diverging statements. "There was speculation about our country which created a psychology of imminent collapse, prophesies which risked becoming self-fulfilling," he said. "There was a lack of co-ordination between various bodies of the union, the commission, the member states, the European Central Bank, even different opinions within those bodies."

EU leaders also failed to impress the financial markets with their tentative response to the Greek debt crisis and suffered another blow from fresh data today showing the eurozone economy stagnated in the last quarter.

With governments declining to put flesh on the bones of plans to rescue Greece from sovereign default, if need be, the markets again rounded on the euro, taking it to a nine-month low against the dollar at $1.3606 this morning.

Despite the market fever, however, leaders across the EU are quietly relaxed about the fall as they view the single currency as too strong. They are privately hoping for an adjustment against the dollar to boost European exports, not least in Germany, the world's champion exporter until recently overtaken by China. >>> Ian Traynor in Brussels, Julia Kollewe, and Helena Smith in Athens | Friday, February 12, 2010