Week of trials for euro with Greek audit, German rescue vote

Greece and the euro face a week of trials from Monday as European and IMF experts resume a fiscal audit that will decide if debt-hit Athens can escape default while Germany tackles a key EU rescue vote. The German parliament is asked to approve on Thursday a stronger version of the permanent European Union stability fund that would permit sovereign debt restructuring, a fallback the eurozone looks increasingly likely to need. That is two days after Greek Prime Minister George Papandreou visits Berlin for talks with German Chancellor Angela Merkel amid mounting speculation that a new EU rescue of Athens crafted in July will need to be revised. Merkel said Sunday she was confident she would not have to rely on the opposition to pass the crunch parliamentary vote on the eurozone, amid threats of a backbench rebellion. "I would like to get my own majority and I am confident I will get this. I am going to campaign for that this week," she said on a talk show with a well-known German media personality ahead of the keenly awaited vote. In Athens, police used tear gas to prevent protesters opposing the government's economic policies from blocking a central Athens avenue in front of the parliament building, an AFP photographer said. Some 2,000 people had gathered earlier on neighbouring Syntagma Square. Greek reports said a group of protesters threw bottles at police. Police played down the incident, which took place as Greek Finance Minister Evangelos Venizelos was in Washington for talks on a new wave of cutbacks aimed at securing loan funds before state coffers run dry in October. Much of the anger is directed against a controversial property tax imposed on top of pay and pension cuts and sales tax hikes already enacted. Several ruling party lawmakers have been heckled in their home constituencies over the measures, and a junior minister was hit by an egg during a visit to Crete on Sunday. A 32-year-old woman was arrested over the incident. "There is no doubt that we are living in wartime conditions," Apostolos Tamvakakis, CEO of main Greek lender National Bank, told the Kathimerini daily. "There is widespread 'Hellenic fatigue' (in Europe)," he added. While Greece continues its furtive dance with bankruptcy, only a year after a massive EU-IMF bailout loan of 110 billion euros ($149-billion), some European leaders still insist the country should not be allowed to go broke. "Greece will avoid bankruptcy, because its in the interest of the Greek state, the Greek people and it is in all our interests," France's European Affairs Minister Jean Leonetti told TV5-monde television channel Sunday. "If Greece goes bankrupt tomorrow it will cost us more than if they don't go bankrupt," Leonetti said. The EU had to set up a second Greek rescue package worth 159 billion euros in July, in order to make Athen's huge debt more viable in the long-term. But, for the second bailout to go through, lawmakers in the 17-member eurozone must approve a boost in funds for the current European Financial Stability Facility (EFSF) and the creation of its post-2013 successor, the European Stability Mechanism. Some eurozone leaders have, however, voiced unease. In Slovakia, where Prime Minister Iveta Radicova officially backs proposals to bolster rescue mechanisms, the eurosceptic Freedom and Solidarity (SaS) party said the proposals must be reshaped before they can be approved. The prime minister cannot pass the measure without SaS backing, but the party's caucus leader, Jozef Kollar, said a compromise was needed, where countries seeking help surrender assets to "an international property holding". Meanwhile in Romania, Justice Minister and European lawmaker Monica Macovei told AFP any rescue packages for debt-stricken nations should "be coupled with anti-graft and anti-fraud measures". While she did not name Greece, Athens had been widely criticised by its creditors for years of failing to regulate under-the-table economic activity. European leaders are still struggling to find a persuasive response to the eurozone's sovereign debt crisis that has rocked the single currency area and raised criticism from the United States and the International Monetary Fund. The IMF's policy board said over the weekend it had agreed to act decisively and collectively "to restore confidence and financial stability, and rekindle global growth".