Sinking Greece requests EU, IMF loan activation

Faced with the prospect of defaulting on its massive debt that may push it to the brink of bankruptcy, Greek Prime Minister George Papandreou today related his countries economic woes to that of a 'sinking ship' in a nationally televised address and formally requested the activation of the EU-IMF $56-billion loan to bail out his country.

The broadcast is reminiscent to Iceland's Prime Minister Geir Haarde's similar nationally televised address in 2008, where had said that his country was on the brink of bankruptcy and sought a $5.44-billion bailout from Russia to help tide over the economic crisis, (See: Iceland headed for bankruptcy; PM seeks $5.44-billion Russian loan).

Speaking from the Aegean island of Kastellorizo, Prime Minister Papandreou said, ''The time has come for us to ask our partners in the EU to activate the mechanism we formulated together,'' referring to the €30 billion in emergency loans agreed by the 16 euro zone countries last week, (See: Euro zone offers Greece €30 billion in emergency loans) and the €15 billion bailout package from the International Monetary Fund (IMF). 

This plea was in sharp contrast to the counry's official stand, which while welcoming the EU's €30-billion bailout last week, had said that it would not take the eurozone loans but would continue with its recovery that include austerity measures and commercial borrowings.

Papandreou's plea has become embarrassing to the Greek government, which found that its prospect of borrowing enough money from the open markets to run the country was extremely difficult.

Papandreou said that the two rounds of austerity measures brought in by the government over the past few months to rein in its finances ''had failed to convince the markets'' that Greece would avert defaulting on its total debt of nearly €300 billion.