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Lenders offer Greece lifeline

Friday, June 17, 2011 - 02:00

June 16 - Investors fear mounting political turmoil in Greece, where a string of resignations have thrown Prime Minister George Papandreou's plans to form a new cabinet into disarray and could derail the country's push to avoid default. Ruairidh Villar reports.

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The morning after another day of protests in Athens - this time violent. Greek Prime Minister George Papandreou had promised to form a new government - to ramp up support for his country's austerity plans. But on Thursday the response was resignations -- from members of his own party. (SOUNDBITE)(Greek) SOCIALIST MEMBER OF PARLIAMENT EKTORAS NASIAKOS SAYING: "As the country is being led down dangerous roads, and the future of our children is black, the political leadership continues on a course based on irresponsibility and populism." World stocks plummeted on Thursday, and the euro hit a one-month low. Euro zone officials are still struggling to agree on how to fund a second Greek bailout, without triggering a default. And for trader Oliver Roth, political disorder in Athens is yet another reason to worry. (SOUNDBITE) (English) CHIEF TRADER WITH CLOSE BROTHERS SEYDLER BANK, OLIVER ROTH, SAYING: "A possible rebuilding of the government in Athens is seen by the stock exchange with great concern because it shows that we see there (are) huge uncertainties, political uncertainties and that would be followed by economic uncertainties. That's not a good thing at all for the stock exchanges." But investors could have a long wait for stability. According to foreign policy analyst George Tzogopoulos, the Greek people need to face up to the facts. (SOUNDBITE)(English) GEORGE TZOGOPOULOS, OF THE THE HELLENIC FOUNDATION FOR EUROPEAN AND FOREIGN POLICY SAYING: "They have not realized Greece is under supervision for the time being and they all have in the back of their minds the illusion that Greece will find the money. That is not a reality and that depends on the decision of the International Monetary Fund and the European Commission." And it's the IMF that could have won Greece some breathing space. The EU's top economic official said the fund would release 12 billion euros in July to keep Greece temporarily afloat. That will give European leaders more time to work out a longer term solution to the country's debt problems. Ruairidh Villar, Reuters.