Papandreou survives vote but euro remains in crisis

THE euro remained on a slippery slope last night as the EU failed to convince world leaders at the G20 summit to step in to shore up the currency.

But Greek Prime Minister George Papandreou won a vote of confidence in Athens bringing the country a step closer to receiving the €8 billion needed to keep it afloat later this month, and agreeing tough conditions for a new €130bn loan.

He is expected to go to the president today to get permission form a new unity government with smaller opposition parties and to step aside to allow his Finance Minister, Evangelos Venizelos, to take over.

After the vote of 153 to 145, Mr Papandreou was being hailed in some quarters as a master tactician, as his threat to hold a referendum galvanised the opposition to support the austerity conditions for the EU/IMF loans, although it sent shock waves through the eurozone and markets.

Economists warned that global recession was edging closer, not least due to the eurozone crisis, which is bad news for Ireland’s recovery with exports predicted to falter in the third quarter.

Eurozone leaders had hoped their boldest plan yet to rescue the currency — a €1 trillion fund — would win the backing of the big developing nations that have double the reserves of the developed world to invest.

But China, Russia and Brazil played hardball, saying eurozone countries have enough money to bail themselves out, and that there were still no details of their proposed investment fund.

Eurozone finance ministers, meeting in Brussels on Monday, are expected to go into overdrive to put together the new “bazooka” rescue fund.

But it could be at least the end of the month before the complex dual structure is ready to be launched on the open market, offering investors what they hope will be a triple-A investment with minimum risks in exchange for money to bail out eurozone nations.

But some fear this latest effort to put the euro up for sale will not come soon enough.