Greece races for rescue, some fear not enough

By Lesley Wroughton and Louise Egan

WASHINGTON (BestGrowthStock) – Finance leaders scrambled to secure aid for debt-stricken Greece on Saturday and Canada cautioned that some European countries feared the 45 billion euros ($60 billion) under consideration was not enough.

Talks over Greece dominated annual International Monetary Fund and World Bank meetings, a day after Athens bowed to market pressure and asked to tap a rescue package from the European Union and the IMF.

“Some countries think it’s not enough,” Canadian Finance Minister Jim Flaherty told reporters when asked about the amount of aid being negotiated.

“Some of the G20 countries, including some of the European countries,” he said when asked which countries were concerned. “There is concern about making sure that the package is enough so that it’s a one-time event.”

Flaherty said Group of 20 rich and emerging nations agreed that the Greece crisis could be contained, if dealt with quickly, with little risk of a spread across Europe.

Greece’s woes dampened optimism over a faster-than-expected economic recovery that otherwise might have been cause for congratulation at G20 and IMF meetings this weekend.

It focused attention instead on poor public finances across the advanced economies, a problem IMF Managing Director Dominique Strauss-Kahn listed among the top two threats to the global recovery.

Strauss-Kahn declined to answer repeated questions from reporters about Greece, saying only that details of the package would be disclosed after negotiations in Athens are completed.


Greek Finance Minister George Papaconstantinou earlier met with U.S. Treasury Secretary Timothy Geithner who stressed the need for a quick response to the crisis.

“Secretary Geithner encouraged them to move quickly to put in place a package of strong reforms and substantial concrete financial support,” the U.S. Treasury said in a statement.

That hinted at growing fears the Greek turmoil could lead to a broader crisis with state debt and must be cut off before it infects other euro-zone economies like Portugal and Spain.

Boris Schlossberg, director of currency research at foreign exchange trading firm GFT, said Greece was running out of time.

“If there’s no statement, if there’s no coordination, if they don’t get support from Germany, for example, the euro will erase all the gains from Friday,” he said.

One of the obstacles to getting aid to Greece is that any money from Germany — the biggest single national contributor to the rescue package — requires parliamentary approval.

There is strong public opposition in Germany to the aid package which is a big issue ahead of a key regional election on May 9, 10 days before Greece has to repay a bond.

German Finance Minister Wolfgang Schaeuble has invited parliamentary leaders for talks in Berlin on Monday to try to speed up the process. Schaeuble did not travel to Washington for the annual IMF and World Bank meetings due to health reasons, sending his deputy instead.


British Finance Minister Alistair Darling, asked by reporters if Germany was holding up a speedy resolution of the Greek crisis, noted Berlin was not represented at the meetings in Washington at the ministerial level.

“No one’s criticizing anyone,” Darling said. “What I do think is that it is absolutely imperative that not only do the IMF reach agreement with Greece as quickly as possible but it’s also essential that the euro zone countries fulfill the obligations they’ve already agreed to in relation to making funds available to Greece.”

Many Germans are angry at the prospect of bailing out Greece, which has racked up a massive budget deficit and admitted past debt data were inaccurate. Some German newspapers on Saturday said the only option for Greece was to drop out of the single currency euro zone.

Papaconstantinou also met European Central Bank President Jean-Claude Trichet and Olli Rehn, the European Union’s Economic and Monetary Affairs Commissioner on Saturday.

Rehn said on Friday that financing for Greece should be ready in early May. It would be the first financial rescue of a member of the euro zone. Time is pressing with an 8.5 billion euro bond due to mature on May 19.

While Greece was clearly the hottest topic, it was not specifically mentioned in the communique released by the IMF’s steering committee following Saturday’s meeting.

In a statement that hit all the high notes of a familiar tune, the IMF member countries agreed to ensure sustainable public finances, address sovereign debt risks and adopt policies that would help rebalance the global economy.

It offered no new proposals on how best to prevent a repeat of the financial crisis, which triggered the worst recession in the United States since World War Two.

(Additional reporting by Emily Kaiser, Sumeet Desai, Louise Egan, Vivianne Rodrigues and Paul Eckert; editing by William Schomberg)

Greece races for rescue, some fear not enough