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As Spain asks for financial support, Greek says problem is Europe-wide

posted 9 Jun 2012, 14:39 by Sam Mbale   [ updated 9 Jun 2012, 14:41 ]

Greeks on the streets of Athens say Spain's request for financial support for its banks raises questions about Europe's economic austerity policies.

Greeks on Saturday (June 9) said Spain's need for European Union funds showed that debt was not just a Greek issue but a problem that affects the entire euro zone.
"It is slowly being proven that the crisis is not only Greek, but is primarily European, and particularly affects the countries of the south. After Spain perhaps it will be time for Italy," said Greek citizen Yannis Mavroyannis, an economist by trade, as Spain requested aid for it banks from its euro zone partners.

Spain's economy minister said on Saturday the country intends to ask for financial help to shore up its banking sector.

Economy Minister Luis De Guindos told a news conference that it was not yet clear which European bailout structure would be used, whether the European Financial Stability Facility or the European Stability Mechanism. He said the amounts needed would be manageable, and that the funds requested would amply cover any needs, and the International Monetary Fund (IMF) will have only an advisory role.

A bailout for Spain's teetering banks could amount to as much as 100 billion euros ($125 billion), two senior EU sources told Reuters.

Spain will be the fourth country receiving financial help after Greece, Ireland and Portugal.

"Spain could be more wise than Greece and avoid the International Monetary Fund, as I hear it will, perhaps it will go only to the European Union without going to the IMF, and perhaps they will handle it better than we did. But for sure things are very very difficult for all of the European Union economically," said Greek doctor Sophia Polychronopoulou.

Greece has received two international bailout loans since 2010 from the European Union and IMF in return for the implementation of a stringent economic reform programme that has angered most of the public.

Greece goes to a repeat election on June 17 after the first vote on May 6 was inconclusive. Parties opposed to the bailout agreement refused to participate in a coalition government with pro-bailout parties.

Almost three years of austerity measures including wage, pension, benefit and job cuts have deepened the recession. Greeks voted to punish the two main parties that implemented the measures in the May 6 election. Critics of the economic reform programme argue the plan concentrates too heavily on cost cutting without implementing any measures to create jobs and growth.

"I wish them good luck and hope they get out of the mess soon. What can I say! Good luck," said 24 year old George Pappas. "I am more worried about us first. But then after that, yes, I am worried about the future of the whole euro zone, because we young people see a very unclear future ahead, we don't know when there will be light on the horizon. We are worried, we are upset, and we hope for a better future - but where will that be?"

Euro zone finance ministers agreed on Saturday to lend Spain up to 100 billion euros ($125 billion) to shore up its teetering banks and Madrid said it would specify precisely how much it needs once independent audits report in just over a week.