Wednesday, May 5, 2010

Angela Merkel: EU future at stake in Greek crisis

Angela Merkel, the German chancellor, has warned that the future of the Europe Union is at stake as the crisis over the Greek bailout pushed the euro to a 13-month low against the dollar.

The euro continued to weaken, weighed down by fears that the Greek debt crisis will spread to other in the eurozone, as a general strik brough Greece to a standstill. A man looks at a departure monitor at the Athens International airport on May 5, 2010. Photo: AFP

Ms Merkel on Wednesday defended her decision to back the unpopular measure and called on fellow politicians to give their support.

"The future of Europe and the future of Germany within Europe is at stake," Ms Merkel told the parliament, which will vote on Friday on a package that would see Germany lend 22.4 billion euros (£19 billion) in taxpayers' money to Greece.

As Ms Merkel attempted to calm fears in Germany, the euro fell on Wednesday to $1.2937 - the lowest level for more than a year.

The slide was the latest sign of continued loss of investor confidence in European economies.

Ms Merkel's cabinet agreed on Monday to the German contribution to a three-year €110bn (£95bn) EU and International Monetary Fund bail-out for Greece. But investors doubt that the loan will be able to stop contagion to other vulnerable eurozone countries, including Spain, Portugal, Ireland and Italy, which also have debt problems. Investors have warned that these countries may require even larger bail-outs.

Meanwhile, Greece ground to a halt on Wednesday, paralysed by a nationwide general strike in the first major test of the socialist government's resolve to push through unprecedented austerity cuts needed to avert a fiscal meltdown.

Protests swept the country, with public transport halted, ferries holding at docks and air traffic grounded as unions went on the warpath against the latest wave of spending cuts and tax hikes.

Hundreds of thousands of civil servants kicked off the protests on Tuesday and a group of about 200 communists also stormed Athens Acropolis, unfurling banners reading "Peoples of Europe, Rise Up" link  link

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