Greek PM in France for debt talks

Papandreou, who visited Luxembourg and Berlin on Friday, is likely to find a sympathetic ear in his meeting on Sunday evening with Nicolas Sarkozy, the French president.

Potential support

Sarkozy has said Greece’s euro-zone partners should not abandon it because doing so would defeat the very purpose of the 16-nation common currency project.

“If we created the euro, we cannot abandon a euro-zone country – otherwise it wasn’t worth it to create the euro,” Sarkozy said at a Paris agricultural fair on Saturday.

“That’s why I’m supporting Greece.”

Christine Lagarde, France’s finance minister, is expected to attend the Papandreou-Sarkozy meeting along with  George Papaconstantinou, her Greek counterpart.

She said the talks would focus on how Greece’s new austerity plan will be enacted and that Sarkozy would back Greece if its debt woes got it into real trouble, but she gave no details of potential emergency support.

Following his meetings in Paris, Papandreou will fly to Washington for talks with Barack Obama, the US president, on Tuesday.

Budget nightmare

Papandreou’s Socialist party came to power in October and shocked Europe by quickly revising the government’s budget deficit to 12.7 per cent of gross domestic product for 2009, from below 4 per cent earlier that year.

Recent protests in Athens are testimony to the unpopularity of new austerity measures [AFP]

Papandreou has called the situation “worse than our worst nightmare”.

Analysts consider France as more sympathetic to Greece’s problems than Germany, where Angela Merkel, the German chancellor, met Papandreou on Friday.

Merkel pledged political support for Greece, but without any concrete details.

She also praised the latest Greek austerity measures, which cut civil servants’ pay, froze pensions and hiked a range of taxes – including those on sales, fuel, cigarettes and alcohol.

But Greece’s new austerity plan has sparked strikes and violent demonstrations at home, with protesters clashing with riot police in central Athens, while a general strike has been called for Thursday, on top of another planned for March 16.

European partners

Both Merkel and Papandreou stressed that Greece is not looking for financial aid from its European partners.

Athens has not asked, Merkel said, and none was being offered.

But what Greece does want is some form of support that would reduce its sky-high borrowing costs on the international market.

It insists it is the victim of speculators who are pushing up the price at which it can borrow.

Papandreou has one big card to play, saying unless his new austerity plan receives the full backing of markets and its European partners, he could be forced to seek help from the International Monetary Fund (IMF).

That is something Sarkozy is thought to be against because the IMF is run by Dominique Strauss-Kahn, his political rival.