European Finance Ministers Facing New Greek, Italian Concerns

Posted November 7th, 2011 at 4:15 pm (UTC-5)
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European finance ministers are gathering in Brussels to decide whether to hand Greece another segment of its bailout money.

The ministers were to meet late Monday to consider the $11 billion Greek funding. Meanwhile, Greece Prime Minister George Papandreou and opposition leader Antonis Samaras conferred in Athens to pick a new caretaker prime minister. The former vice president of the European Central Bank, Lucas Papademos, has emerged as a possibility to fill the position.

Mr. Papandreou is stepping down in favor of a short-term coalition government after abandoning his call a week ago for a referendum on the European Union debt-relief plan to help solve Greece's financial woes. In Washington, the White House said it welcomed the Greek consensus on creating a new government and urged that it quickly implement financial reforms.

Meanwhile, new European debt concerns are quickly emerging in Italy, Europe's third-largest economy after Germany and France. Italy's borrowing costs rose to more than 6 percent, approaching the unsustainable levels that forced Greece, Ireland and Portugal to secure international bailouts in the last year and a half.

Italian Prime Minister Minister Silvio Berlusconi is under increasing pressure to resign, with his parliamentary majority in question.

But Mr. Berlusconi said on the social networking site Facebook: “Rumors of my resignation are baseless.”

European finance ministers also plan to work on details of the continent's new $1.4 trillion bailout fund to head off future debt problems in Europe.

Economist Marco Simoni at the London School of Economics has deep concerns about the Italian government debts. He told VOA that the European Union “couldn't afford to bail it out.” He said that if the Italian government defaults, “the entire world economy is going to collapse.”

In order to secure its new funding, Greece is required to raise taxes and make deep cuts in the number of government jobs and the size of pensions. A coalition government will last until new elections, preliminarily scheduled for February 19.

Mr. Papandreou will not lead the new coalition. It is not clear if he plans to run again next year.

A Greek government spokesman said that Sunday was a historic day for Greece, with the prime minister agreeing to give up power to possibly save the country from bankruptcy. But many ordinary Greeks, who say they have sacrificed enough, say all politicians are the same and that new elections are meaningless.

Greek Finance Minister Evangelos Venizelos has said Greece needs the next $11 billion installment of its existing bailout by December in order to avoid bankruptcy.