Papandreou To Ask Obama To Support Debt Plan

Greek Prime Minister George Papandreou meets President Obama at the White House Tuesday. The prime minister is seeking international support for his efforts to deal with the debt crisis in Greece. Papandreou says he is not looking for financial handouts, instead he's expected to ask Washington for political support for his domestic austerity measures.

STEVE INSKEEP, host:

The prime minister of Greece is in Washington today. George Papandreou runs a country in the middle of a financial crisis. That crisis caused trouble across Europe, because it affects the European currency, the Euro. The prime minister says he is not seeking a bailout from President Obama. Papandreou is seeking global governance of financial markets. NPR's Michele Kelemen reports.

MICHELE KELEMEN: When he was introduced at the Brookings Institution yesterday it was pointed out that George Papandreou had something in common with President Obama. Both inherited a financial crisis, a theme likely to dominate their talks today. Papandreou says he was hit with the bad news when he became prime minister in October.

Prime Minister GEORGE PAPANDREOU (Greece): After we took office we discovered that the budget deficit was actually double - double what our predecessors had told us, told European authorities and the Greek people.

KELEMEN: Papandreou has already made the rounds in Europe, saying he's not looking for aid to bail out a reckless country. Rather he's promising to carry out an austerity plan, cutting public sector salaries and increasing taxes, hoping that will reassure financial markets and make it easier for Greece to borrow the money it needs to get through this crisis.

He also wants to see the world's biggest economies, the group of 20, do more to regulate markets and prevent speculators from using complex financial instruments to bet against countries like his.

Prime Minister PAPANDREOU: Together with my European partners, we have taken a common initiative to strengthen financial regulation, particularly vis-�-vis speculation. We need clear rules on shorts, naked shorts and credit default swaps. So I hope that there will be a positive response from this side of the Atlantic to bring this initiative to the G-20 in its next meeting.

KELEMEN: While he discusses the big picture at the White House, an analysts at the Center for Global Development says the Greek prime minister would be better off just going down the street to the International Monetary Fund. Liliana Rojas-Suarez is a former IMF official.

Ms. LILIANA ROJAS-SUAREZ (Former International Monetary Fund official): If the IMF defines the programs that say ok, you're going to do this kind of adjustment, but I will do the money to support that adjustment, the investor will say okay, there is IMF money there, and therefore the credibility of the program increases.

KELEMEN: The Greek finance minister is paying a courtesy call to the IMF, according to officials there, but a visit is not on Papandreou's schedule. The prime minister has had a series of other meetings, including with Secretary of State Hillary Clinton, who offered moral support.

Secretary HILLARY CLINTON (Department of State): Neither the prime minister nor Greece has asked the United States for anything. We support the steps that Greece is taking.

But what I think Greece is looking for, as the prime minister alluded to, is that the United States, working in the G-20, will make some of the changes in regulatory regimes governing some of these financial instruments that have been used to the detriment, not only of Greece, but of other countries including our own.

KELEMEN: And as she and Papandreou discussed foreign policy issues ranging from the Balkans to Iraq, Clinton jokingly came up with another innovative way for Greece to plug its deficit.

Secretary CLINTON: And, of course, Greece is, uh, the birthplace of democracy. So anything there's a democratic election anywhere in the world Greece should get a royalty, Prime Minister.

KELEMEN: Papandreou said that certainly would help with his budget woes, though that's one drastic step he's not planning to take.

Michele Kelemen, NPR News, the State Department.

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