Greek PM welcomes Obama backing to take on speculators

WASHINGTON (AFP) – Greek Prime Minister George Papandreou said Tuesday he had won a pledge from US President Barack Obama to take on the issue of speculators blamed for deepening Greece's economic crisis.

"We have found a positive response from President Obama which means this issue will be on the agenda in the next G20 meeting," Papandreou said after White House talks.

Papandreou has warned that his country's economy is being brought to its knees by speculators raking in billions by betting on a Greek default and welcomed US support for tackling the issue.

He added that French President Nicolas Sarkozy, German Chancellor Angela Merkel and other European leaders had now sent an important signal that they would not allow speculators to "play around" with the security of the Eurozone.

The Greek leader reiterated that he had not asked the United States for a bailout, even as his government struggles to extricate Greece from a debt crisis that has had a harsh knock-on effect on the euro.

"We haven't asked for financial help, we are not asking for a bailout, we are not asking for financial help from anyone," he said.

"What we are doing is first of all revamping our own economy. That has been recognized and hailed by many leaders. We are doing our job."

Greek Finance Minister George Papaconstantinou, conscious of growing opposition in Greece to government austerity measures, told CNBC television earlier that his country desperately needed access to cheaper loans.

"We're not looking for any financial rescue. We're trying to borrow on international markets on our own terms," he said, adding that Greece could not continue to borrow at interest rates exceeding six percent.

Greece has been forced to pay a much higher rate of return when it offers debt to investors than that offered by more stable economies, evidence that its volatile economy is making it harder for Athens to secure financing.

Papaconstantinou visited the International Monetary Fund in Washington on Monday to discuss technical assistance with Deputy Managing Director Murilo Portugal amid speculation that Greece may seek an IMF bailout if support from the European Union proves inadequate.

In a welcome distraction for the beleaguered Greek leader, Papandreou is to attend a White House celebration on Tuesday evening in honor of Greece's Independence Day.

Washington is the third leg of Papandreou's trip, after France and Germany, as he drums up international backing for his debt-crippled nation.

Ahead of his talks with Obama, Papandreou met House of Representatives speaker Nancy Pelosi, and won a warm personal endorsement.

"Prime minister Papandreou is to be commended for his courage in responding to Greece's financial and economic challenges," Pelosi said.

"The Greek people can be assured that the United States will stand with them in this critical time."

On Monday, Papandreou issued an impassioned plea on the United States to help crack down on the speculators he blames for exacerbating Greece's woes.

"Unprincipled speculators are making billions every day by betting on a Greek default," he said, following reports US funds placed big bets against the euro, the sole currency of 16 European Union member states, including Greece.

The euro has had a rocky ride since it was disclosed that Greece's public debts have mushroomed to 300 billion euros (408 billion dollars), well above its annual economic output.

He also warned that coordinated speculative attacks on the euro would harm the US economic recovery

"That is why Europe and America must say 'enough is enough' to those speculators who only place value on immediate returns, with utter disregard for the consequences on the larger economic system -- not to mention the human consequences of lost jobs, foreclosed homes, and decimated pensions."

Greece's 10-year bond offer for five billion euros (6.8 billion dollars) last week attracted bids worth 16 billion euros after it fixed a high yield, or rate of return, of above six percent.

The rate's spread, or differential, was about 300 basis points more than for the benchmark German Bund, showing that Greece has to pay some three percentage points more than Germany to raise funds in the markets.