European Union to Pressure Greece to Adopt Unpopular Austerity Measures
Thursday, June 23, 2021 1:02 PM

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European Union leaders will put pressure on Greece at a summit on Thursday to force the country to adopt deeply unpopular austerity measures in return for fresh funds to avoid bankruptcy that could shake the global economy.

Meanwhile, euro-zone governments are forcing banks and insurers to maintain their exposure to Greek sovereign debt when their bonds mature, despite the heightened risk of default, as part of a planned second financial rescue for Athens.

The euro-zone leader are expected to tell Greek Prime Minister George Papandreou that they will release the 12 billion euro ($17 billion) in emergency aid on July 3 to prevent Athens running out of money in mid-July, provided the Greek parliament adopts key economic reforms next week.

Although the Greek prime minister expressed confidence over the vote in public, Slovak Prime Minister Iveta Radicova said Papandreou had voiced doubts in a private telephone call.

U.S. Federal Reserve Chairman Ben Bernanke stressed on Wednesday that much more than the future of Greece was at stake.

"If there were a failure to resolve that situation, it would pose threats to the European financial system, the global financial system, and to European political unity, I would conjecture, as well," he said.

The summit agenda also involves appointing Mario Draghi as the next head of the European Central Bank, agreeing to increase the size of the euro zone's current bailout fund and completing the creation of a permanent crisis fund by June 2013.