Greek bailout

Greece must agree to tough new austerity measures before it receives any financial aid from the European Union, finance minister Wolfgang Schaeuble said ahead of a meeting Monday of party leaders about how Germany should help tackle the Greek financial crisis.

Greece announced on Friday that it would have to seek financial support from the European Union and International Monetary Fund (IMF) to the tune of 45 billion euros (US$ 60.1 billion).

As Europe's biggest economy, Germany is expected to be responsible for providing 8.4 billion euros out of the 30 billion euros that Europe could be asked to provide this year.

For Germany to provide this aid, "depends entirely on whether Greece continues with the strict savings course it has launched," Schaeuble told the Sunday edition of "Bild" newspaper.

Coalition rift?

A similar demand was raised by the German Foreign Minister Guido Westerwelle.

"It has yet to be agreed that Greece will actually get assistance from Europe at all", he told German ZDF television, and added: "We will not write a blank cheque".

However some members of Westerwelle's liberal Free Democratic Party (FDP) were more critical of the Greek request. The FDP is Chancellor Angel Merkel's junior coalition partner in the government.

FDP deputy leader Andreas Pinkwart said it would be "a slap in the face of German employees" if the government would give billions of euros to Athens, and tell Germans "there's no money left for easing their tax burden."

The party's finance expert Hermann Otto Solms also criticized Finance Minister Schaeuble’s plans.

"It was wrong to put the pot of honey in the middle of the table right from the start," he said. "That was a signal for the Greeks to just help themselves."

The right thing to do would have been to offer Greece no help and direct them straight to the IMF, Solms told the Passauer Neue Presse daily.

"This is where Mr Schaeuble made a mistake," he said.

Call for Greece to leave euro zone

The government’s role in the rescue package also received criticism from Chancellor Merkel’s second coalition partner, the Bavarian-based CSU party.

CSU parliamentary leader Hans-Peter Friedrich said his party would prefer Athens to leave the eurozone and solve its problems by "re-introducing its former national currency, the Drachme, at a devalued rate of exchange".

Friedrich's opinion was echoed by economist Joachim Starbaty from Tuebingen University. Greece was "no longer competitive within the eurozone," he said.

"It's impossible for the country to repay its debts and the loans it now receives because its economy will be unable to accumulate surpluses for a long time ", he said. "Devaluing a national currency is the only chance for Greece to regain its competitiveness."

Starbaty announced on Monday he would lodge an official complaint with Germany's Constitutional Court should parliament in Berlin give the green light to the bailout package.

Uh/Reuters/AFP/dpa
Editor: Rob Turner