European Finance Ministers Facing New Greek, Italian Concerns

Posted November 7th, 2011 at 11:25 am (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 as Greek leaders try to shape a caretaker government to carry out far-reaching austerity measures.

The finance ministers were set to meet late Monday to consider the $11 billion Greek funding as Greece's socialist Prime Minister George Papandreou and conservative opposition leader Antonis Samaras spoke in Athens to pick a new caretaker prime minister.

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.

One of Greece's conservative leaders, George Karatzareris on Monday welcomed the new government, but only if it stopped cutting wages.

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 his social networking site Facebook page: “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.

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.