"Feb. 11 (Bloomberg) -- European leaders ordered Greece to get the bloc’s highest budget deficit under control and promised “determined” action to staunch the worst crisis in the euro currency’s 11-year history.
The agreement, brokered by German Chancellor Angela Merkel, Greek Prime Minister George Papandreou and European Central Bank President Jean-Claude Trichet, called for closer monitoring of the Greek economy and stopped short of offering concrete measures to help officials in Athens handle a debt load exceeding annual economic output. Greek bonds rose and the euro fell after the deal was announced at a European Union summit.
“It’s a political message that we wanted to send out today,” EU President Herman Van Rompuy told reporters today in Brussels. “This political message has a responsibility dimension to it. The Greek government is taking on a responsibility.”
“Our European way of life is at stake,” he said.
The EU leaders’ statement, which Merkel called a “clear political signal” to Greece, left open how the EU would respond to a fresh wave of speculative attacks against Greece or countries such as Spain and Portugal, which are also struggling to cut their budget deficits. The statement echoes prior calls for Greece to clean up its accounts and gave the International Monetary Fund a monitoring role.
Euro-region leaders also discussed the creation of a lending facility for Greece, an EU official said. States would contribute in proportion to the size of their economies, said the official in Brussels, who spoke on condition of anonymity. The official said it’s “not yet time” for a European bond."