BUSINESS

French, Greek, German leaders insist debt-ridden Greece is 'integral' part of eurozone

09/14/2011 08:19 EDT | Updated 11/14/2011 05:12 EST
ATHENS, Greece - Greece is an "integral" part of the eurozone, the leaders of Greece, France and Germany said in an emergency teleconference Wednesday night that aimed to calm markets and temper talk of an imminent default by Greece.

Fears that Greece was heading rapidly towards a chaotic default — and the idea that it should potentially leave the euro and return to its own currency — have roiled markets for days, both across the 17-nation eurozone and globally.

"In the face of the extensive rumous of the last few days, it was stressed by all that Greece is an integral part of the eurozone," government spokesman Elias Mossialos said after the discussion between Greek Prime Minister George Papandreou, German Chancellor Angela Merkel and French President Nicolas Sarkozy.

In Germany, Merkel's spokesman, Steffen Seibert, said Merkel and Sarkozy stressed the significance for the Greek economy of "the strict and effective implementation" of the international bailout for the debt-ridden country. Athens must stick to specific fiscal targets and pass specific reforms, including a large privatization drive, in order to keep receiving bailout funds that are keeping it financially afloat.

"This is the precondition for the payment of future tranches of the program," Seibert's statement noted.

Merkel and Sarkozy "are convinced that the future of Greece is in the eurozone," he said. "The success of Greece's adjustment will strengthen the stability of the eurozone."

Mossialos said his country was "determined to meet all its commitments to its partners, so ensuring the full implementation of the support program."

He said that new austerity measures announced in recent days, including a new property tax, will ensure that Greece achieves its fiscal targets this year and next year, and will lead to the country posting primary growth. Greece currently is posting a primary deficit, which means it is spending more than it makes even before interest rates on outstanding debt is taken into account.