Greece warns citizens over bailout

A SENSE of panic was beginning to grip Brussels as Greece warned its protesting citizens it was just one step away from being unable to borrow and eurozone members differed on the solution.

The differing and changing messages from EU capitals pushed the euro to a one-week low and the price to Greece of borrowing continued to rise.

Germany, facing important regional elections in May, is pushing for Greece to turn to the IMF for aid rather than face the wrath of the German public by having the eurozone bail out the country.

Netherlands, Finland, and Italy together with non-euro Sweden, supported this suggestion that just a week ago appeared to be anathema to the EU on the grounds that it would allow IMF countries with different currencies to have a say in euro policy.

But France continues to insist that the priority must be to find an EU solution and that talk of an IMF loan was premature. Earlier this week the French Foreign Minister Christine Lagarde pointed the finger at Germany’s trade imbalance as part of the eurozone’s problem.

The Greek crisis is not officially on the agenda for next Thursday and Friday’s EU summit but nobody doubts that it will dominate the discussions.

The EU’s economics commissioner Ollie Rehn following meetings with IMF head, Dominique Strauss-Kahn, called on the leaders to reach a political conclusion and clarify the way forward at their meeting next week.

A special task force has been charged with the job of creating a framework for a eurozone rescue plan although Finance Ministers in Brussels on Tuesday were unable to give political approval to the initial outline considered at their meeting.

But after visiting the heads of several member states and Commission President Jose Manuel Barroso this week, the Greek Prime Minister Geroge Papandreou, clearly showed he was becoming frustrated with the lack of clear support to help his country borrow more cheaply and differing messages from the EU.

He told the country’s biggest trade union, GSEE: “With full honesty towards Greeks, we talked about the point we have reached — one step before being unable to borrow”.

He said he would prefer a European solution and “being able to show the world Europe can act together”.

Mr Rehn said Europe was at a crossroads. “Either we take determined and joint action for Europe’s economic and political revival, or we risk a lost decade of economic stagnation and political irrelevance”.