(Refiles to fix typos in paragraph 15)
* Says EU took time to react to speculation.
* Spain and Portugal “victims of hysteria”
* Calls for EU to revive growth
* Greek-German resentment “not irreparable”
(Adds details, quotes)
By Martin Roberts
MADRID, May 23 (Reuters) - Greek Prime Minister George Papandreou ruled out defaulting on debt payments or restructuring in a Spanish newspaper interview published on Sunday.
“We have no need for defaulting on payments or restructuring,” Papandreou told El Pais. “We have opted not to do so. We have opted to pay back the loans we have requested.”
When asked, Papandreou said he did not believe his government would reach a point beyond which it could not ask people to tighten their belts further in order to convince markets its public finances were in order.
“That is what we have decided, and that is the reason why we have this programme of measures from the European Union,” he said.
EU governments are trying to regain investors’ confidence after months of turmoil that have pushed many euro zone member states’ borrowing costs sky high led to a 110 billion euro bailout of Greece and the setting up a $1 trillion safety net to try to prevent the contagion spreading.
Papandreou said he thought EU governments had been slow to act in order to prevent the Greek crisis spreading to other members of the 16-country euro currency.
“The EU took time to realise that speculators’ attacks on Greece were just a step before attacking other countries and even threatening the stability of the euro zone,” he said.
The debt crisis has provoked huge instability in the 11-year-old euro currency and led to demands for EU states to work much harder on coordinating their economic policies and bring their finances into check.
Harsh spending cuts in Greece which have led to violent riots have been matched by austerity measures in Spain and Portugal, whose wide budget deficits have also helped to roil financial markets.
SPAIN AND PORTUGAL
“Spain and Portugal were not so bad, but they have been victims of hysteria,” Papandreou said.
The Prime Minister said that austerity measures would curtail growth in the Greek economy, and called for the EU to provide stimulus measures.
“We have to create the necessary conditions for growth and in this, once again, the EU can help,” he said.
“Whether by pushing ahead with infrastructure projects or creating the necessary backdrop for more investment in the EU, concretely in the southern countries, and also in central and eastern Europe.”
Papandreou said he and German Chancellor Angela Merkel had been “sincere with each other”, but added there was “resentment” between the two countries over the cost of the bailout and pressure to enforce austerity measures.
“It is not irreparable. I would say there is resentment. But I believe what bothers people is what we consider prejudice and stereotypes.”
Legislators in Germany, the euro zone’s biggest economy, on Friday approved the $1 trillion safety net, but Merkel failed to secure the broad backing she had sought to ease public hostility to bailing out weaker euro zone states. (Reporting by Martin Roberts; Editing by Louise Heavens)