Greeks move to tap emergency aid

ATHENS, Greece - Hobbled by exorbitant borrowing costs, Greece triggered an emergency aid plan Friday to draw on international aid - marking the first test of whether the European Union is prepared to bail out one of its members.

The package has enough money to keep Greece from defaulting on its huge debts anytime soon. But Athens still faces years of painful cutbacks and questions about its long-term finances, raising worries that its troubles will affect other indebted EU members.

The three-year aid plan Greece will use was agreed on in Brussels recently and was hailed as a sign that Europe can cope with the crisis. The package will provide Greece with two sets of loans: Euro-zone members will contribute $40 billion at interest rates of about 5 percent, while the International Monetary Fund will chip in about $13.5 billion this year. Exact figures for the following years have not been made public.

European governments made the backstop available to fend off a Greek default, which would deal a serious blow to the euro currency, shake market confidence, and inflict losses on banks invested in Greek bonds. It also aims to keep Greece's troubles from spreading to other weak euro-zone governments, such as Portugal and Spain.

Greece is under no illusions that the plan will resolve all the problems of a country that has a staggering debt of $400 billion and other serious fiscal issues. The nation needs to borrow about $72 billion this year alone. It's already covered about half that amount with bond and treasury-bill issues, but it has $11.5 billion worth of 10-year bonds maturing May 19.