Obama, Greek PM set to discuss financial reforms

Papandreou and US President Barack Obama and Papandreou hold talks Tuesday after the Greek leader raised concerns that speculators are undermining his efforts to overcome the country\'s debt crisis.

The Greek leader, who arrived in Washington after visits to France and Germany to drum up international backing for his debt-crippled nation, has adopted major austerity measures in a bid to cut the 12.7 percent public deficit.

In his first public address on Monday, Papandreou said: "Unprincipled speculators are making billions every day by betting on a Greek default."

Reports have said hedge funds have placed major bets against the euro, which is used by 16 European states, including Greece.

The prospect of a possible Greek default has roiled global financial markets, pressuring the euro, and even raising questions about the long-term viability of European monetary union.

The single European unit has come under market pressure since it was disclosed that Greece\'s debt has mushroomed to 300 billion euros (408 billion dollars), well above its annual economic output.

Papandreou warned that the repercussions of any coordinated speculative attacks on the euro would 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," he said.

A White House statement said economic issues would form an important part of Tuesday\'s talks between the two leaders.

They were expected "to discuss their shared commitment to financial reform and economic recovery," said the statement.

The Obama-Papandreou meeting comes as the European Commission prepares to float proposals to create a "European IMF," that could rescue debt-hit countries such as Greece.

A spokesman said the EU\'s Economic and Monetary Affairs Commission gave a tentative deadline of the end of June for full details on how it would be funded.

Papandreou, meanwhile, is unlikely to ask for financial aid from the United States.

But his hard-pressed Socialist government, which faces a barrage of strikes over austerity cuts, has suggested it could appeal to the International Monetary Fund for help if rebuffed by European Union partners.

"Neither the prime minister nor Greece has asked the United States for anything," Secretary of State Hillary Clinton said after talks with the Greek leader on Monday.

Papandreou wants the United States to lobby for financial reforms in the Group of 20 industrialized and emerging nations, she said.

"What I think Greece is looking for, as the prime minister alluded to, is that the United States, working in the G20, will make some of the changes in regulatory regimes governing some of these financial instruments that have been used to the detriment not only of Greece, but of other countries, including our own," Clinton said.

She cited as an example credit default swaps which function like a an insurance contract for bonds.

US and European regulators are scrutinizing such contracts amid concerns that excessive speculation could have exacerbated Greece\'s fiscal woes.

Clinton said the United States wanted to work with other nations to reform the "unregulated financial market that globally moves money at the speed of sound, if not light, and leaves in its wake all kinds of consequences that governments have to contend with."

© Copyright AFP Agence France-Presse GmbH - All rights reserved. This material may not be published, broadcast, rewritten or distributed. All reproduction or redistribution is expressly forbidden without the prior written agreement of AFP.