'Time for Europe to wake up' on debt crisis: Papandreou

(AFP)

ATHENS — Greek Prime Minister George Papandreou said Saturday it was "time for Europe to wake up" and find a conclusive solution to his nation's debt crisis, which threatens to undermine the eurozone.

Papandreou, who has frequently expressed impatience at the slow progress of the negotiations, made his latest comments in an interview to appear in Sunday's Kathimerini daily.

Papandreou insisted that Greece would not default on its huge debt and that talks were ongoing for a "long-term" resolution to the crisis.

"We are in the process of reaching a long-term debt breather," he said, referring to efforts between European leaders and foreign ministers to reach a formula that will make Greece's 350-billion-euro ($495-billion) debt viable.

"At this stage, there is no room for voices that cultivate fear and bank on failure," he added.

Just hours earlier, Papandreou joined fellow European socialists in calling for a dedicated agency to stabilise euro debt and limit the power of credit rating agencies.

European Union officials have denounced recent decisions by the leading ratings agencies to downgrade countries struggling with debt amid efforts to recover, arguing that they have become part of the problem.

Eurozone nations will hold an extraordinary summit on July 21 in Brussels to discuss how to tackle the debt crisis and provide fresh aid for Greece.

But EU nations want to move quickly to stop the debt crisis spreading from Greece, Ireland and Portugal to other countries perceived as vulnerable, such as Italy and Spain.

Der Spiegel weekly will on Monday report that Germany's finance minister believes Greece could slice 20 billion euros ($28 billion) of its massive debt burden by buying back its own bonds.

The European Financial Stability Facility (EFSF) could lend the money to Greece so it could buy back bonds from private creditors at market prices, Der Spiegel reported.

In another interview to appear in Greek daily To Vima on Sunday, European Central Bank executive board member Lorenzo Bini Smaghi says the EFSF's role could be amended to permit bond purchases on the secondary market.

This could help lighten Greece's debt and also permit private-sector involvement, Smaghi said, while noting that the alternative solution of European bonds is not an easy option.

Papandreou has in the past warned that failure to settle the question of an international bail-out for Greece could sink unpopular reforms there that his administration has fought bitterly to push through.

The EU and International Monetary Fund bailed out Athens last year with a package worth 110 billion euros ($160 billion) but the country remains in serious financial difficulty, with credit rating agencies having demoted Greece's bonds to junk status.

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AFP: 'Time for Europe to wake up' on debt crisis: Papandreou