Papandreou faces key confidence vote

Greek Prime Minister George Papandreou says there is no going back on a 28 billion euro programme of spending cuts needed to calm fears over the future of the euro.

Reuters

Speaking ahead of a crucial vote of confidence on Tuesday, he said the government was determined “to be on track with the programme and move forward to do what is necessary in order to get our country into a fiscally much better and viable position”.

Although the prime minister has only a single figure majority in parliament after recent defections, he is expected to scrape through the vote. A defeat would make his position untenable and could force Europe back to the drawing board.

Greece currently has debts of around 350 billion euros and is desperate to secure a second bailout worth more than 100 billion euros after a loan of 110 billion last year failed to stop the rot.

There are fears in Europe that the problems in Greece could spread to other countries in the Eurozone, notably Ireland, Spain and Portugal.

Europe is divided over how to stop a possible contagion. German Chancellor Angela Merkel has so far failed to persuade her peers that under a new second package, private creditors could swap existing Greek debt for new bonds with longer maturities.

The European Central Bank has argued this would amount to a default on the loan which could send shock waves through the European and global financial systems.

• 21 June – Key vote of confidence for Greek Prime Minister George Papandreou.

• 28 June – Parliament votes on 28.4 billion euros of austerity cuts essential to securing 12 billion euros in emergency funds to prevent defaulting on its debt repayments.

• 3 July – Eurozone governments meet to decide on the emergency cash and work out    details of a second bailout worth more than 100 billion euros.

• Mid-July – Without the extra cash, the government will default on debt payments.