Greece and EU close ranks, say no bailout

Fri Jan 29, 2010 11:28am EST
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By Paul Taylor and Natsuko Waki

DAVOS, Switzerland (Reuters) - Greek and European Union officials closed ranks on Friday, insisting there was no chance of a Greek default or an EU bailout and that Athens would do whatever it takes to cut its burgeoning deficit.

"Solidarity is possible, will exist. A bailout is not possible and will not exist," EU Monetary Affairs Commissioner Joaquin Almunia told Reuters Insider TV.

Greek Prime Minister George Papandreou, also at the World Economic Forum in Davos, promised to do all that was required to cut the deficit and restoring confidence.

"Greece is in a situation where we need to take very strong measures and structural changes in our country," he said. "We're determined to implement the program."

The euro zone has pledged to cut its budget deficit this year to 8.7 percent of gross domestic product from over 12 percent and return to the EU's 3 percent cap by 2012.

But fears that Athens will not be able to rein in spending have continued to haunt markets and put pressure on the euro, fuelling speculation the euro zone would eventually step in.

A senior euro zone official said on Friday that there were no formal talks or preparations in any European institutions to help Greece financially and that the EU strategy toward Greece was to continue pressing hard for budget cuts.

However, there may be informal talks among officials in some EU capitals over what to do in a worst-case scenario, said the official, who declined to be named.   Continued...

<p>Greece's Prime Minister George Papandreou (L) speaks next to Spain's Prime Minister Jose Luis Rodriguez Zapatero during a session at the World Economic Forum (WEF) in Davos January 28, 2010. REUTERS/Christian Hartmann</p>