Greece will reform, PM Papandreou promised Germany

German Chancellor Angela Merkel was to meet Greek Prime Minister George Papandreou on Tuesday evening, appealing to his European partners to help him tackle the country’s debt crisis, BCC informs. He further promised German industrialists that Greece would meet its commitments under its EU/IMF bailout program despite missing key fiscal targets so far. “I can guarantee that Greece will live up to all its commitments,” Papandreou said. “I promise you we Greeks will soon fight our way back to growth and prosperity after this period of pain,” he said in an impassioned address. The Greek parliament was due to approve a deeply unpopular new property tax later on Tuesday, one of several extra austerity measures the government is rushing through to plug a budget hole uncovered by EU/IMF inspectors earlier this month. “The euro zone must now take bold steps toward fiscal integration to stabilize the monetary union. Let’s not let allow those who are betting against the euro to succeed,” he said. The meeting comes two days ahead of a crunch vote in the German parliament to expand the rescue fund – or European Financial Stability Facility (EFSF) – for debt-mired Greece and other faltering countries. Just eight of the 17 eurozone states have so far ratified the new EFSF powers agreed at a July summit.

Merkel, under pressure from voters and some in her center-right coalition to take a tough line with Greece before Thursday’s vote, said Germany would show solidarity with its partners to secure the future of the euro. “We will provide all the help desired from the German side so that Greece regains trust,” Merkel told the conference. “If the stability of the euro is at stake – and the experience of the last few years (tells us) that the difficulties of one country endanger our common currency – then that obliges us to show solidarity within the common currency.” Although the bill will be passed as opposition parties support it, she faces a blow to her authority if she has to rely on their votes. The center left says Merkel would be finished if she fails to secure a majority from her own ranks. “Agreement to this fund is of the greatest significance,” Merkel said. Papandreou echoed that sentiment, saying Europe’s bailout fund had to be expanded. German Finance Minister Wolfgang Schaeuble was forced to deny that any further increase in the bailout fund is planned in a bid to calm irate lawmakers in the center-right coalition.

In his turn, Finance Minister Evangelos Venizelos has told yesterday in press conference in Athens to Greeks that they face economic collapse if they don’t plug a budget deficit that is exceeding targets.

World scared by euro crisis, warns Obama

Europe’s failure to tackle crippling Greek debt is ‘‘scaring the world’’, US President Barack Obama has warned as Germany downplayed prospects of any quick and dramatic change of course in the eurozone debt crisis, CNBS informs. Europe ‘‘never fully dealt with all the challenges that their banking system faced’’, Obama said on Monday, as prospects of a new debt transfusion evaporated amid Germany’s refusal to up guarantees covering debt-laden euro currency partners. ‘‘It’s now being compounded with what’s happening in Greece,’’ he said. ‘‘So they’re going through a financial crisis that is scaring the world.’’ The European Union sent mixed messages on Monday about the way forward. His treasury secretary, Timothy F. Geithner, said Europe has “not very much time” to act.

Economic Affairs commissioner Olli Rehn said the EUR 440 bln. European Financial Stability Facility, the cornerstone of a second Greek bailout trapped in parliamentary argument, should be given ‘‘greater strength.’’ Meanwhile, European Central Bank (ECB) policymakers said Monday that officials were working to increase the firepower of the region’s rescue fund in their latest effort to staunch the crisis.

Stock markets rallied sharply on Tuesday on hopes European leaders will finally get a grip on the long-running crisis which is threatening the euro project, Wall Street Journal informs.

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