France and Germany encourage Greece to meet reform goals

The leaders of both France and Germany have told Greek Prime Minister George Papandreou that he must oversee the implementation of fiscal reforms as agreed in a July 21 bailout plan. 

LONDON, ENGLAND (Catholic Online) - Long simmering controversy is threatening to boil over if Greece fails to meet terms imposed by their July 21 agreements. Several European Union countries imposed conditions on Greece as part of a bailout package designed to stave off a default, which officials fear could lead to a more ruinous fiscal disaster.
 Meanwhile, investors are staying away from the euro zone as threats of a Greek default and bank failures persist. 

While some economists have argued that Greece should exit the Euro zone and be allowed to engage in what they call a "slow default," French President Nicolas Sarkozy and German Chancellor Angela Merkel said they were determined the keep Greece in the euro zone. They also added that they expected Greece to meet their fiscal reform goals.
 Papandreou reassured the two leaders by telling them that Greece still intends to honor the terms of the July 21 agreement. 

European leaders are working out the details of another round of bailout monies to be sent to Greece to prevent default. Analysts warn that a Greek default could result in a fiscal chain reaction which would cause large euro zone banks to fail and could plunge the entire world into recession. With several countries struggling to maintain trend of even modest growth, such a prospect is frightening. 

That fear is driving investors from European markets and putting downward pressure on other world markets. The key to relieving that pressure are the Greek reforms which will guarantee they can receive their next bailout installment. 

The euro zone bailout remains unpopular with some elements in Europe. Critics worry that another round of money for the troubled nation is sending good money after bad and that there is very little hope of Greece repaying it. Sarkozy and Merkel are trying to reassure such critics by guaranteeing that Papandreou's government keeps its word.

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