Brussels - Greek Prime Minister George Papandreou said on
Friday he is negotiating a new bailout worth some €110bn, as Europe enters a
crucial 10 day period to ringfence the euro crisis.
The Greek premier is in the eye of a storm threatening
financial markets, the unity of Europe's 17-nation currency area, and even the
EU - with the United States warning of a potential to drag down world economic
"We are talking about a huge, huge amount," said
Papandreou, after formally requesting aid at a two-day European Union summit in
While he said it was "too early to give a precise
amount," the final sum would be "similar to the first aid
package" in May 2010, which was not enough to prevent the government in
Athens from slipping ever deeper into the red.
The actual size, Papandreou admitted, "depends on the
participation of the private creditors," those banks, pension funds and
insurers that the EU wants to contribute to a rescue by way of an
"informal and voluntary" rollover.
Greece needs to impose ever more unpopular austerity on a
restive people on June 28, with the European Union placing its faith in Athens
to clear parliamentary opposition and a general strike.
Even before the new bailout, Greece owes the equivalent of a
year-and-a-half of total national economic output, some €350bn.
On Friday, the euro slid against the dollar amid persistent
concerns the Greek debt crisis spreading contagion across the eurozone.
German Chancellor Angela Merkel said on Friday that leaders
had struck "an important political accord for the stabilisation of the
euro," which Belgian Prime Minister Yves Leterme said took just half an
hour to thrash out.
Merkel stressed the EU had "encouraged Ireland,
Portugal and Greece to follow the roadmap set down with the troika" of the
European Commission, the ECB and the IMF that is monitoring the rescues.
In a quirk of timing, nine months after a trip that took in
Greece and Italy, Chinese Premier Wen Jiabao was back in Europe on Friday
offering his support to the region's beleaguered economies.
If Papandreou steers his legislation through next week's
voting, €28bn of additional austerity measures will be imposed over five years,
alongside a sale of Greek state holdings which international partners hope can
raise up to €50bn.
But Papandreou has only a slim, five-seat majority, and
waverers in his Socialist Party, and he faces a general strike called by Greek
unions starting on Tuesday.
Greek conservative opposition leader Antonis Samaras also
bluntly rejects "more taxes in an economy in unprecedented
Euro finance ministers next meet on Sunday July 3, the key
deadline they need to meet in the rescue.
The immediate impact of Thursday's deal should see Athens
receive in mid-July a €12bn tranche of eurozone and IMF loans from last year's
bailout, which Greece needs to avert default.
"There is a very strong determination among the member
states to save what we have done since 50 years all together," French
Foreign Minister Alain Juppe said of fears the eurozone and ultimately the EU
itself might implode due to the crisis.
US Federal Reserve chief Ben Bernanke has warned that
failure of the rescue efforts "would pose threats to the European
financial systems, the global financial system and to European political
The new Greek bailout would combine fresh eurozone loans and
privatisation proceeds with a contribution from banks and other private
investors who are being pressed to rollover Greek bonds coming due for
French President Nicolas Sarkozy said private-sector
creditors had shown "a will to save the eurozone," although Italian
bank shares plummeted on the Milan stock exchange over fears of a downgrade by