Europe pledged Thursday to fix a new bailout for Greece by early July, provided Athens rallies parliamentary support for sweeping new cuts amid mounting global pressure to shield the euro on markets.
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| Greek Prime Minister George Papandreou leaves at the end of the first day of a summit of the EU heads of State in Brussels. |
As negotiators for the EU and the IMF struck agreement with the Greek government on implementing 28 billion euros of cuts and bringing in tens of billions from the sale of state holdings, Athens formally requested financial aid during a two-day summit in Brussels.
Greek lawmakers must pass the new austerity plan before June is out, the European Union said, allowing eurozone finance ministers "to complete work on outstanding elements to allow the necessary decisions to be taken by early July."
With the bloc under US pressure to avert financial market contagion from the euro debt crisis, Greek Prime Minister George Papandreou said on leaving the summit for the night: "We\'ve got the support of our partners and I think this is not only a green light but also a positive sign for the future of Greece."
EU president Herman Van Rompuy said the finished design of the new rescue demanded by the International Monetary Fund and worried international partners should allow initial "disbursement in time to meet Greece\'s financing needs in July."
That can be taken to refer to a 12-billion-euro tranche of loans from last year\'s 110-billion euro bailout ($156 billion), which Greece needs to avert default in July and which was blocked pending next week\'s vote in the Greek parliament.
The EU leaders called on "all political parties in Greece to support the programme\'s main objectives," saying "national unity is a prerequisite for success."
Papandreou has a slim, five-seat majority in the Greek assembly and on Thursday Greek unions announced a general strike timed to coincide with the vote.
Greek authorities settled their new plan for the cuts during negotiations in Athens with the European Commission, the European Central Bank and the IMF, with Papandreou vowing "radical changes to make our economy viable."
He added: "This is a fight for the Greek people, this is a fight for Greece, for our country, but it\'s also a fight for a common European currency and a common Europe."
The commission said the parallel deal in Athens to close the fiscal gap for the years 2011-2014, and raise tens of billions of euros from selling off state holdings, now has to be "translated into concrete legislative measures."
Finance ministers from the 17-nation eurozone meet again on Sunday July 3 -- days ahead of a deadline for Greece to repay maturing debt or face default.
Greek opposition leader Antonis Samaras said beforehand he opposed "more taxes in an economy in unprecedented depression," but German Chancellor Angela Merkel urged his party "to accept its historic responsibility."
Warning that Europe must act swiftly to avoid damaging contagion, US Federal Reserve chief Ben Bernanke had warned that failure to find agreement "would pose threats to the European financial systems, the global financial system and to European political unity."
Those remarks followed scathing comments from US Treasury Secretary Timothy Geithner and IMF fears of "large global spillovers."
Commission chief Jose Manuel Barroso said the EU had to act in the face of such criticism.
"When our partners ask: Europe, be more coherent, be stronger, take decisions quicker... that\'s something I take seriously," he said.
The second bailout of Athens in just over a year is set to also involve banks agreeing to lend the Greeks more money in the form of a rollover of bonds due for redemption over the summer.
In the latest sign of knock-on effects from that approach, Moody\'s ratings agency said on Thursday it had put the ratings of 16 Italian banks on review for possible downgrade.
However, the euro stemmed earlier losses by 2100 GMT as the latest deal took shape, reaching 1,4257 dollars against 1,4349 late on Wednesday.
