Greece looks to IMF as hope of EU rescue package fades
GREECE is doing everything the IMF (International Monetary Fund) would ask of it, its prime minister said, as the chances of an EU rescue fund began to fade.
Premier George Papandreou challenged Germany to give up its doubts about a rescue package, while insisting Greece could manage without one. But the doubts in Berlin appeared to be growing, not easing.
"We don't want to be in a situation where we have the worst of the IMF and none of the advantages of the eurozone," he told reporters yesterday.
"This is where Europe must come in and say, okay, we either can provide what the IMF could provide -- at an ad hoc level because we don't have the institutions -- or in the end Greece may have to choose the option to go to the IMF."
He is pushing for Taoiseach Brian Cowen and his EU counterparts to agree an aid package at a Brussels summit next week.
The chances of that appear to be fading after the chief finance spokesman for German Chancellor Angela Merkel's party said Greece should turn to the IMF if it needs aid.
"We have to think about who has the instruments to push for Greece to restore its capital-markets access," Michael Meister, an MP with Ms Merkel's Christian Democratic Union, said in an interview in Berlin.
"Nobody apart from the IMF has these instruments."
Attempting a Greek rescue without the IMF "would be a very daring experiment," he said.
Separately, Ms Merkel repeated the controversial suggestion that changes be made to the Lisbon Treaty to allow persistent deficit countries be forced out of the eurozone.
Mr Papandreou said after meeting European parliamentarians that it would be a "missed opportunity" if a decision wasn't made.
"I would prefer the European solution . . . as a European," he told MEPs. "We are not going to default. We are saying that we don't need this money," he added.
"We are taking IMF measures. We have talked to the IMF. They would have asked us for nothing more."
Interest rates on Greek government debt rose and the euro fell as doubts grew about the German government's position.
Although the idea of a rescue fund was first mooted by the German finance minister Wolfgang Schaeuble, there is strong political opposition to any such move, as well as doubts about its legality under the Maastricht Treaty.
However, ECB president Jean-Claude Trichet has openly said that he does not believe an IMF package is appropriate for a euro country and the French government takes a similar view. (Additional reporting Bloomberg)