EU leaders have opened the door to the possibility of rescuing troubled eurozone economies by stating they would take action to ensure the safety of the euro area following a special summit in Brussels.
They did not, however, offer to bail-out the troubled Greek economy, saying the country must take whatever measures are needed to help themselves, adding that the Greek government had not requested any financial support.
A statement read out by EU President Herman Van Rompuy called on Greece to implement all measures to reduce their budgetery deficit by 4% this year.
It is currently at 12.7%, more than three times the permitted level under EU rules.
The EU is determined that Greece will make the necessary cut backs to their public spending, and agreed that experts from the International Monetary Fund will work with the European Commission to monitor the economy every month.
The statement read by Mr Van Rompuy said: “Euro area member states will take determined and coordinated action, if needed, to safeguard financial stability in the euro area as a whole.”
Taoiseach Brian Cowen, speaking after the meeting, said markets would look at the statement and see a clear direction on how the Greek government will deal with the situation.
“This is an important statement with a clear and specific outcome.”
He said Ireland still faced significant challenges in getting its economy back on track but the international reaction had been favourable to the fact that labour costs and the cost of living had fallen and that competitiveness had improved.
However, the markets were less positive and the value of the euro fell slightly on international markets.
Finance ministers will next week discuss the options open to them should Greece need aid.
But it was not clear what kind of help Germany, as the only country in a position to help, could give Greece.
German Chancellor Angela Merkel made it plain that coming to the aid of a country may not be that simple as the German Constitutional Court some years ago ruled the country could not bail out others.
She told journalists that before any promises could be made, the Germans had to investigate further but also said that the EU was “not going to leave Greece on its own”.
The Greek Prime Minister George Papandreou, who had discussions beforehand with Chancellor Merkel, French President Nicholas Sarkozy and the president of the ECB, Jean-Claude Trichet, said his country was ready to make further cuts to reduce its budget deficit.
The special summit was called by Mr Van Rompuy and after the meeting Ms Merkel and Mr Sarkozy held a joint press conference to show their support for closer cooperation through the EU rather than inter-governmental intervention.
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