Warning for Athens

A top EU official has said that Greece could face default in March unless the country's government can prove that it's making cutbacks closer to home.

Jean Claude Juncker, who chairs the Eurogroup of eurozone finance ministers, told the German news magazine Spiegel that Greece cannot expect "others to show solidarity" unless it's pulling its weight as well.

"If we were to establish that everything is going wrong in Greece, then there would be no new program, and that would mean that in March they would face bankruptcy," Juncker said. The prime minister of Luxemburg also said this prospect should motivate the Greek people and government to raise their game.

Greece is in the process of negotiating with its international partners and the private sector on a number of areas, needing to progress quickly in order to secure a second package of emergency loans worth 130 billion euros (roughly $170 billion) from eurozone partners and the International Monetary Fund (IMF).

Race against time

The government in Athens needs to satisfy inspectors from the so-called "troika" - comprised of officials from the European Union, IMF and European Central Bank - that reforms are progressing quickly, while also seeking an agreement with private investors on a partial write-down of its existing debt. Failure to achieve either of these goals might stop the next influx of international loans, which the country needs to meet a 14.4-billion-euro loan repayment due on March 20.

Greek Finance Minister Evangelos Venizelos said on Saturday that the talks were "on a knife edge," saying that a deal needed to be finalized by Sunday night so as to stay on course for the March bond maturation. Venizelos also spoke of a "great impatience and great pressure not only from the three institutions that make up the troika but also from eurozone member states," which he said were making the talks very difficult.

French Finance Minister Francois Baroin also acknowledged that the negotiations were difficult, but said progress had been made on the possible private sector write-down. He dismissed suggestions that Sunday had to be the decisive day of talks.

"In any case, the rendez-vous is on February 13 at the latest," Baroin said, alluding to the tentative deadline for a deal set by the European Union.

msh/ccp (AFP, Reuters)