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FT: Greece turns on EU critics

By Kerin Hope in Athens, Quentin Peel in Berlin and Tony Barber in Brussels
Published: February 12 2010 20:32 | Last updated: February 12 2010 20:50

Greece on Friday unleashed a fierce attack on its European Union partners, accusing them of creating a “psychology of looming collapse” a day after they pledged support for the country’s crisis-hit government.

George Papandreou, Greek prime minister, said that, in the eurozone’s first big test, Greece had become “a laboratory animal in the battle between Europe and the markets”.

In a televised address to his cabinet, he criticised EU members for sending “mixed messages about our country?.?.?.?that have created a psychology of looming collapse which could be self-fulfilling”.

Mr Papandreou blamed the European Commission for failing to crack down on the previous conservative government’s “criminal record” in falsifying statistics. “This has undermined the responsibility of the European institutions with international markets,” he said.

His outburst is likely to infuriate the very leaders whose help Mr Papandreou needs. It came as it emerged there would be no more talk of financial assistance until Athens had persuaded the EU that it had a sustainable austerity programme in place.

Germany is insisting Athens bears initial responsibility for restoring confidence in Greece. Angela Merkel, German chancellor, resisted French efforts to come up with an explicit bail-out package at Thursday’s summit of EU leaders in Brussels.

Officials in Paris said Ms Merkel’s insistence on additional efforts by Greece to cut its budget deficit came close to thwarting agreement at the summit. According to sources in Athens, she called for a rise in Greek value-added tax of 1 per cent, in addition to extra spending cuts. Herman Van Rompuy, EU president, drafted a compromise before the summit started.

Ms Merkel’s tough stance has overwhelming political and popular support in Germany.

Government officials say they are also constrained by constitutional court rulings, which insist on strict adherence to fiscal and monetary stability criteria in the eurozone.

Members of both government and opposition parties in the Bundestag said there would be no parliamentary support for any financial rescue package for Greece without clear evidence of drastic cuts in state spending. Eurozone finance ministers are due to meet on Monday, but no detailed rescue plan will be on their agenda.

Additional reporting by Ben Hall in Paris

http://www.ft.com/cms/s/0/3cfeab9e-1813-11df-91d2-00144feab49a.html