One week after European leaders made an agreement to decrease Greece’s debt and avoid financial meltdown in the Euro zone, Greek Prime Minister George Papandreou warned the Greek parliament that the only way to stay in the euro currency is to agree to last week’s deal.
Greece is reportedly softening its opposition to the plan as Papandreou has called off a referendum for the Greek people to vote on the plan, after first announcing it on Monday. Papandreou, who has ignored calls to resign, also said he is seeking emergency talks with the opposition to the plan, according to the Associated Press.
The White House today stressed that, regardless of what happens in Greece, the Eurozone debt deal must be implemented swiftly. On Friday, Papandreou faces a confidence vote in Greece’s parliament.
European leaders have acted quickly to try to avoid a recession. The European Central Bank decreased its benchmark interest rate to 1.25 percent from 1.5 percent on Thursday. On Wednesday night, French President Nicolas Sarkozy and German Chancellor Angela Merkel warned Papandreou that Greece would not receive aid until it reached its requirements for the euro, reported Reuters.
Greece was to receive an installment of 8 billion euros as a loan this month and has said it will run out of money in mid-December otherwise.
The bailout plan would cut in half the privately held Greek sovereign debt, according to Peter Morici, professor at the Smith School of Business, University of Maryland School.
“However, to receive this concession and other aid from richer EU governments, Greeks must accept draconian austerity measures,” Morici, the former chief economist at the U.S. International Trade Commission, wrote in a note. “These would further drive up unemployment, and shrink Greece’s economy and tax base at an alarming pace, placing in jeopardy eventual repayment of Athens’ remaining debt.”
Morici said the Greeks should accept the bailout and continue in the euro “only if they determine the currency serves them well.”
“As currently constituted, a single currency may serve the One Europe designs of France and Germany, but make Greece and the other Mediterranean states nothing more than the victims of a northern conquest,” he wrote.
However, world leaders, including President Obama, have urged European leaders during the G-20 summit in Cannes, France, to quickly carry out their agreement and resolve Europe’s financial crisis.
ABC News’ Linda Albin contributed to this report.