June 24, 2011
European Union leaders pledged to stabilize the euro-area economy, vowing to stave off a Greek default as long as Prime Minister George Papandreou pushes through a package of budget cuts next week.
“This is not only a green light but also a positive sign for the future of Greece,” Papandreou told reporters after the first session of an EU summit in Brussels late yesterday.
Greece’s next hurdle is to shepherd 78 billion euros ($111 billion) of austerity measures through parliament, after yesterday’s endorsement of the program by experts from the European Commission, European Central Bank and International Monetary Fund.
Europe’s latest attempt to stem the debt crisis came after bonds of debt-strapped euro nations slumped and officials in the U.S. and China warned that the euro area’s failure to restore confidence threatened the world economy.
The summit ends today with leaders facing a potential last- minute hitch over the final approval of Italy’s Mario Draghi as president of the European Central Bank. French President Nicolas Sarkozy is putting pressure on another Italian on the ECB board, Lorenzo Bini Smaghi, to step down two years before his term ends to make way for a French replacement.
Yesterday’s discussions were dominated by Greece, drawing on 110 billion euros of loans pledged last year. The leaders paired their show of solidarity with pressure on the Greek opposition party to fall in line with the savings program.
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