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Europe
Greek PM urges austerity measures
Greek Prime Minister warns of bankruptcy if no effective plans are put in place.
Last Modified: 26 Feb 2010 18:37 GMT
Greece is expected to issue government bonds [EPA]

George Papandreou, the Greek Prime Minister, has warned that his country risks bankruptcy unless strict austerity measures are enacted fast to cut the deficit.

Greece's government overspending reached 12.7 per cent of output in 2009 as the global downturn sent public deficits through the roof. 


The deficit ordeal has put government bonds under pressure, weakening the euro and pushing the eurozone into crisis.

Greece is widely expected to issue government bonds next week and experts believe it could resort to selling them directly to a few large institutional customers rather than auction them off on capital markets.

In his efforts to seek a way out of the financial crisis, Papandreou held talks with Josef Ackermann, Deutsche Bank CEO on the country's debt crisis on Friday. 

He also accepted an invitation to meet German Chancellor Angela Merkel on March 5, government officials said.

The crunch talks were scheduled ahead of a visit next week by EU Finance Commissioner Olli Rehn to inspect Greece's budget reforms, in view of a March 16 EU deadline to show fiscal improvement or face further spending cuts.

Relations with Germany 

Tensions between Greece and Germany over the debt crisis have been played down by officials.

"There is clearly a slight disagreement" between Berlin and Athens, Stefan Bredohl, a foreign ministry spokesman, told a regular briefing.

The German ambassador sought to offer "clarification" to Greece after a Greek consumer association, enraged by the cover of a German magazine, called for a boycott on German goods.

The cover of this week's Focus magazine showed the ancient Greek statue the Venus de Milo making an obscene hand gesture with the caption: "A cheat in the euro family."

The association, Inka, demanded an apology from Chancellor Angela Merkel, who will hold clear-the-air talks with Prime Minister Papandreou in Berlin next Friday.

The talks will cover "all topics relating to bilateral  relations, European policy and other international questions,"  Sabine Heimbach, a government spokeswoman said, adding that "current events" would also be tackled.

But adding to bilateral tensions is a decades-old spat over war reparations, reheated by Athens as concerns over its debt mountain sent the euro spiralling downwards on the foreign exchange markets.

The mayor of Athens, Nikitas Kaklamanis, said: "You owe us 70 billion for the ruins you left behind."

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