Greek Prime Minister George Papandreou is adding a dose of brinkmanship to his international diplomatic offensive.
His whirlwind tour of Luxembourg, Berlin, Paris and Washington is designed to secure enough financial support to allow Greece to raise some €22-billion ($30.8-billion) to pay off maturing debt in April and May. If the support doesn’t come through, Greece risks, at best, having to pay punitive interest rates to get its next series of bonds out.
At worst, it risks defaulting on its debt, a scenario that would destroy market confidence in Portugal, Spain and other weak countries that share the euro, and accelerate the currency’s downward spiral. The euro has dropped about 8 per cent against the dollar in three months as Greece’s budget deficit soars and investors question the ability of the euro, used in 16 of the European Union’s 27 countries, to survive.
Mr. Papandreou is seeking a reward for the €4.8-billion austerity package his government passed last week, one that won the praise of other euro zone governments and allowed Greece to sell €5-billion of bonds.
But the wealthy euro zone countries have been reluctant to commit to specific financial measures to help Greece. If Mr. Papandreou’s euro zone tour leaves him empty-handed, he has made it clear that he will knock on the door of the International Monetary Fund (IMF).
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