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WASHINGTON: Greek Prime Minister George Papandreou held talks on Tuesday with President Barack Obama seeking US action against speculators he says are deepening his country's financial crisis.
As Papandreou went into closed-door Oval Office talks, White House spokesman Robert Gibbs sidestepped questions over whether the United States would support any kind of bailout for Greece.
"This is the issue for the European Union," Gibbs said, adding that this was also the position of US allies in Europe. "This is something the Europeans can and should solve."
The White House said economic issues would be an important part of the discussions along with financial reform, with Obama seeking global economic stability to bolster the US recovery.
A welcome distraction as he struggles to extricate Greece from a debt crisis that has had a harsh knock-on effect on the euro, Papandreou was also to attend a White House celebration in honour of Greece's Independence Day.
Unusually for an visit of a key foreign leader, no press availability was planned by the White House during the Oval Office talks, though Obama will make public remarks later at the White House reception.
Greece's finance minister, George Papaconstantinou, set the table for the Obama talks by warning that his country was being brought to its knees by speculators raking in billions by betting on a Greek default.
"We're not looking for any financial rescue. We're trying to borrow on international markets on our own terms," Papaconstantinou told CNBC television, as opposition grew in Greece to government austerity measures.
"It's just that at the moment, we're borrowing at high cost," he said, referring to interest rates exceeding six percent. "It's clear we cannot continue borrowing at those rates."
Greece is having to pay a much higher rate of return when it offers debt to investors than that offered by more stable economies, evidence that its volatile economy is making it harder for Athens to secure financing.
Papaconstantinou visited the International Monetary Fund in Washington on Monday, to discuss technical assistance with Deputy Managing Director Murilo Portugal, the fund said.
The talks came amid speculation that Greece may seek an IMF bailout if support from the European Union proves inadequate. Greece has not ruled out asking the Washington-based fund for help.
Washington is the third leg of a trip by Papandreou, also taking in France and Germany, as he drums up international backing for his debt-crippled nation, which has adopted new austerity measures to pull out of its crisis.
Ahead of his talks with Obama, Papandreou met House of Representatives speaker Nancy Pelosi, and won a warm personal endorsement.
"Prime minister Papandreou is to be commended for his courage in responding to Greece's financial and economic challenges," Pelosi said.
"The Greek people can be assured that the United States will stand with them in this critical time."
On Monday, Papandreou called on the United States to crack down on speculators he blames for exacerbating Greece's woes.
"Unprincipled speculators are making billions every day by betting on a Greek default," he said, following reports US funds placed big bets against the euro, the sole currency of 16 European Union member states, including Greece.
The euro has had a rocky ride since it was disclosed that Greece's public debts have mushroomed to 300 billion euros (408 billion dollars), well above its annual economic output.
On Monday, Papandreou attempted to play the US recovery card, warning that repercussions of coordinated speculative attacks on the euro would also be detrimental to the United States.
"That is why Europe and America must say 'enough is enough' to those speculators who only place value on immediate returns, with utter disregard for the consequences on the larger economic system - not to mention the human consequences of lost jobs, foreclosed homes, and decimated pensions."
Greece's 10-year bond offer for five billion euros (6.8 billion dollars) last week attracted bids worth 16 billion euros after it fixed a high yield, or rate of return, of above six percent.
The rate's spread, or differential, was about 300 basis points more than for the benchmark German Bund, showing that Greece has to pay some three percentage points more than Germany to raise funds in the markets. - AFP/de
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