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EU Leaders Turn Up The Heat On Greece

Antiausterity demonstrators confront riot police near the Greek parliament in Athens.
BRUSSELS -- European Union heads of government have put pressure on the Greek government to pass a raft of austerity measures next week in order to secure more rescue funds from the EU and the International Monetary Fund (IMF).

During a summit in Brussels, the European leaders also urged the reluctant opposition in Athens to rally behind the stringent measures of tax hikes and privatization that the government has outlined.

It was also agreed that EU member states and the European Commission would make greater use of structural funds to kick-start the Greek economy¨

Just days after surviving a vote of confidence in the Greek parliament, Prime Minister George Papandreou faced a demand in Brussels from his European colleagues: push through a package in parliament of spending cuts and tax hikes worth 28 billion euros, as well as a 50-billion-euro privatization program.

The move is needed to obtain the next installment of a 110-billion-euro bailout package from the EU and the IMF, worth 12 billion euros.

As he left the summit, Papandreou said Greece had the support of its partners and that this was a "a positive sign" for his country and the wider eurozone.

Fighting To Save A Common Europe

The prime minister maintained that the Greek people had "shown tremendous commitment, strength and effort" in attempting to rectify their country's economic situation.
Greek Prime Minister George Papandreou

"This is a fight for Greece, for our country, but it is also a fight for a common European currency and a common Europe," he said. "So we are on path and we are decided and expect that the European Union also will create an efficient framework to deal with this crisis."

Papandreou's Social Democrats enjoy a narrow majority in the country but the opposition has so far refused to back the government's move causing worries that the reform efforts will stall.

EU leaders agreed on a text stating that "national unity is a prerequisite for success" and added that adoption of the austerity measures "must be finalized as a matter of urgency in the coming days."

Strong Signal

Jerzy Buzek, the president of the European Parliament, stressed the need for national unity to calm down the markets and avoid speculation about a Greek default in the coming years.

European Parliament President Jerzy Buzek
He added that, if the Greek parliament could vote overwhelmingly in favor of a package of austerity measures and structural reforms, it would be "quite obvious that the signal for financial markets for the next three years will be much stronger."

The Portuguese Prime Minister, Pedro Passos Coelho, whose country recently received a bail-out from the EU, said there was no alternative if the Greek parliament voted down the measures:

"We must believe that the program in the Greek parliament will achieve success," he said. "It's very, very important for all of us in Europe."

The need for further reform in Athens is also necessary to secure support for a second Greek bailout worth tens of billions of euros later in July. Germany has been reluctant to agree on such a move unless the private sector would cover some costs.

Maximizing Structural Funds

Although German Chancellor Angela Merkel indicated that no decision was to be taken at the summit regarding a possible second bailout, the heads of government did agree that required additional funding in the future will be financed through both official and voluntary private sources.

During the meeting, the EU Commission President, Jose Manuel Barroso, also received support from the member states to use structural funds to maximize the growth impact in Greece.

The funds are used as a tool for poorer regions in the EU, mainly in the new member states, to economically catch up with richer regions in the west.

On June 24, EU leaders will wrap up their summit, where they are expected to back the conclusion of accession talks with Croatia by the end of the month. That would clear the way for it to become the bloc's 28th member in 2013.
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    Rikard Jozwiak

    Rikard Jozwiak is the Europe editor for RFE/RL in Prague, focusing on coverage of the European Union and NATO. He previously worked as RFE/RL’s Brussels correspondent, covering numerous international summits, European elections, and international court rulings. He has reported from most European capitals, as well as Central Asia.