Brussels - AFP
Greek Prime Minister George Papandreou said Friday he is negotiating a new bailout worth some 110 billion euros, as Europe enters a crucial 10 day period to ringfence the euro crisis. The Greek premier is in the eye of a storm threatening financial markets, the unity of Europe's 17-nation currency area, and even the EU -- with the United States warning of a potential to drag down world economic recovery. "We are talking about a huge, huge amount," said Papandreou, after formally requesting aid at a two-day European Union summit in Brussels. While he said it was "too early to give a precise amount," the final sum would be "similar to the first aid package" in May 2010, which was not enough to prevent the government in Athens from slipping ever deeper into the red. The actual size, Papandreou admitted, "depends on the participation of the private creditors," those banks, pension funds and insurers that the EU wants to contribute to a rescue by way of an "informal and voluntary" rollover Greece needs to impose ever more unpopular austerity on a restive people on June 28, with the European Union placing its faith in Athens to clear parliamentary opposition and a general strike. Even before the new bailout, Greece owes the equivalent of a year-and-a-half of total national economic output, some 350 billion euros. On Friday, the euro slid against the dollar amid persistent concerns the Greek debt crisis spreading contagion across the eurozone. German Chancellor Angela Merkel said Friday that leaders had struck "an important political accord for the stabilisation of the euro," which Belgian Prime Minister Yves Leterme said took just half an hour to thrash out. Merkel stressed the EU had "encouraged Ireland, Portugal and Greece to follow the roadmap set down with the troika" of the European Commission, the ECB and the IMF that is monitoring the rescues. In a quirk of timing, nine months after a trip that took in Greece and Italy, Chinese Premier Wen Jiabao was back in Europe on Friday offering his support to the region's beleaguered economies. If Papandreou steers his legislation through next week's voting, 28 billion euros of additional austerity measures will be imposed over five years, alongside a sale of Greek state holdings which international partners hope can raise up to 50 billion euros. But Papandreou has only a slim, five-seat majority, and waverers in his Socialist Party, and he faces a general strike called by Greek unions starting on Tuesday. Greek conservative opposition leader Antonis Samaras also bluntly rejects "more taxes in an economy in unprecedented depression." Euro finance ministers next meet on Sunday July 3, the key deadline they need to meet in the rescue. New bailout 'similar' to last year in size: Greek PM The immediate impact of Thursday's deal should see Athens receive in mid-July a 12-billion-euro tranche of eurozone and IMF loans from last year's bailout, which Greece needs to avert default. "There is a very strong determination among the member states to save what we have done since 50 years all together," French Foreign Minister Alain Juppe said of fears the eurozone and ultimately the EU itself might implode due to the crisis. US Federal Reserve chief Ben Bernanke has warned that failure of the rescue efforts "would pose threats to the European financial systems, the global financial system and to European political unity." The new Greek bailout would combine fresh eurozone loans and privatisation proceeds with a contribution from banks and other private investors who are being pressed to rollover Greek bonds coming due for redemption. French President Nicolas Sarkozy said private-sector creditors had shown "a will to save the eurozone," although Italian bank shares plummeted on the Milan stock exchange over fears of a downgrade by rating agencies.