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EU President: Greece Will Get Aid Before HUGE Debt Payments Are Due

MALCOLM FOSTER   04/28/10 09:47 AM ET   AP

Greek Aid Eurozone Stability

TOKYO — The European Union's president said Wednesday he is fully confident that debt-laden Greece will receive the financial assistance it needs in time to address its debt problems and to preserve eurozone stability.

Negotiations on a euro 45 billion rescue package are "on track" among the EU, European Central Bank, IMF and the Greek government, and an agreement should be reached by early May, Herman Van Rompuy said. He also said he plans to hold a eurozone summit by May 10 at the latest.

Greece faces a May 19 deadline, when around euro 10 billion of debt comes due.

Concerns about Europe intensified when Standard & Poor's on Tuesday downgraded Greece's debt to junk status and hit Portugal with a two-notch rating cut, raising concerns of a wider financial contagion and sending global markets into a tailspin.

"I would like to recall the strong commitment of the euro area member states at the highest level to take the necessary steps to ensure financial stability of the euro area as a whole," Van Rompuy told a news conference in Tokyo after meeting with Japanese Prime Minister Yukio Hatoyama.

The Greek crisis has disrupted cooperation between eurozone governments, with Germany resisting the idea of bailing out Greece unless strict conditions are met. It also threatens to undermine the euro and make it harder and more expensive for all eurozone governments to borrow money.

Van Rompuy stressed the need to preserve the stability of the eurozone but ruled out any restructuring of Greek debts, calling it "out of the question."

He said he was "fully confident" that "Greece will receive on time from the IMF and the European Union the financial assistance it needs to implement its adjustment program and to preserve the stability, I reiterate, the stability of the euro area."

In Asian trading Wednesday, Japan's Nikkei 225 stock average led the region-wide retreat with a 2.6 percent drop, while Hong Kong's Hang Seng index shed 1.5 percent. In Europe, Britain's FTSE 100 index was down 0.4 percent, while Germany's DAX fell 1.3 percent.

During their meeting Wednesday, Van Rompuy and Hatoyama agreed to launch a high-level working group to discuss strengthening their economic partnership, including the possibility of a free trade agreement.

But Van Rompuy and European Commission President Jose Manuel Barroso, also in Tokyo, said there were still plenty of obstacles to overcome before that could become a reality.

"Many so-called non-tariff barriers to trade remain in place, which hamper access to the Japanese market and cause hesitance from the EU side to go ahead," Van Rompuy said at an earlier press conference.

The two countries also agreed to promote cooperation on reconstruction and reconciliation efforts in Afghanistan and in combatting piracy off the coast of Somalia.

Van Rompuy, a 62-year-old former Belgian prime minister, was chosen to be the EU's first president last November after the Lisbon Treaty established the post to accelerate EU decision-making.

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Filed by Nate C. Hindman  |