(RFE/RL) -- European Union leaders, meeting today in Brussels, said they are prepared to take joint action to help Greece's troubled economy in order to avoid a broader economic crisis in the eurozone that could undermine the stability of the common currency.
EU President Herman Van Rompuy made the announcement to reporters. But he offered little beyond verbal reassurances.
"Euro-area member states will take determined and coordinated action, if needed, to safeguard financial stability in the euro area as whole," Van Rompuy said. "The Greek government has not requested any financial support."
Officials fear that if the crisis sparked by Greece's mounting debt and high budget deficits is not addressed quickly, it could spill over to other high-debt states like Portugal and Spain and undermine confidence in the euro.
Van Rompuy urged Athens to take steps to reduce its budget deficit in order to restore confidence in its economy, calling on the Greek government "to implement all these measures in a rigorous and determined manner to effectively reduce the budgetary deficit by 4 percent in 2010."Devil In The Details
Details of the Greek assistance package are expected to be finalized early next week, when EU finance ministers meet. EU leaders said the package would likely involve some form of loans to Greece to help it service its debt and avoid a default. Athens has already pledged to cut its deficit by four percentage points this year.
Germany and France are expected to provide the bulk of support for Greece, largely because other big eurozone economies like Italy and Spain are themselves under financial pressure.
Van Rompuy stressed that the EU would keep a close eye on how the deal is implemented, that the executive commission "will closely monitor the implementation of the recommendations in liaison with the European Central Bank and will propose needed additional measures, drawing on the expertise of the International Monetary Fund."
EU leaders had initially avoided discussing a possible bailout openly, in hopes that Athens would move quickly itself to enact tough austerity measures to bring down a deficit that hit 12.7 percent of gross domestic product (GDP) last year -- more than four times the eurozone limit.
Greece needs to borrow 53 billion euros (approximately $75 billion) this year to cover its deficit and refinance debts that are expected to climb to 290 billion euros -- nearly 120 percent of GDP.
Unemployment in Greece jumped to 10.6 percent, its highest level in five years, according to date released today. Moreover, civil servants threatened to step up strike action to protest austerity measures that include freezes on public-sector wages and an overhaul of the tax system.
The euro first rallied, then fell, and then stabilized at approximately $1.37 on the news that a deal had been reached. Analysts say markets are waiting for the details of the package to emerge next week.
with agency material
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