Germany, France vow to back beleaguered Greek economy

LONDON – Calling Greece an “integral part” of the eurozone, the leaders of Germany and France vowed Wednesday to keep the currency union intact and to stave off a disruptive default by Athens as it carries out painful reforms to help beat back the debt crisis engulfing the region.

At the same time, Italy, another debt-ridden eurozone country caught in investors’ cross-hairs, approved a contentious new austerity plan in an effort to bring down a public debt that exceeds $2 trillion.

Days of market swings and mixed messages over a possible Greek default prompted an emergency conference call Wednesday evening between Greek Prime Minister George Papandreou and the heads of Europe’s two biggest nations, German Chancellor Angela Merkel and French President Nicolas Sarkozy.

The three agreed that Greece ought to remain in the eurozone, despite growing number of calls for it to be cut loose, and that a second international bail-out for the Mediterranean nation should come into force as quickly as possible. The $150 billion rescue plan, on top of a similar package last year, was crafted by eurozone leaders in July but remains subject to the approval of national parliaments.

A spokesman for the Greek government, Elias Mossialos, said Merkel, Sarkozy and Papandreou agreed on the “need to swiftly proceed with the implementation” of the second bailout.

Under intense diplomatic and market pressures, representatives in the lower chamber of Italy’s parliament approved a $70 billion austerity plan that was weeks in the making and that sparked large public protests.

The markets have hammered Italy for taking so long to come up with a program of public-spending cuts. The new plan, backed by Italian Prime Minister Silvio Berlusconi, includes a tax on the rich and speeding up a plan to boost the age at which women are allowed to retire.