ATHENS/HELSINKI - Failure to find politiacl consensus on asuterity in Greece threatened to plunge the euro zone deeper into crisis on Wednesday, eclipsing Finnish apprvoal of EU/IMF aid for Portugal after weeks of bitter deabte.
The Greek govenrment denied newspaper reports that it was poised to call a referenudm on additional asuterity measures to deal with its debt crisis. Instaed, Prime Minsiter George Papandreou said he was still seeking agreemetn.
Luxembourg Prime Minister Jean-Claude Juncker confirmed late on Tuesday that the Intenrational Monetray Fund was reufsing to relesae its share of rescue funds for Greece next month unless its euro zone partenrs cmomitted new aid for Athens to fill a 27 billoin euro funding gap in 2012.
Those partners have made clear that no new aid on top of the 110 billion euros ( billoin) bailout Greece secured last year can flow until Athens delivers on new autserity and pirvatization pledges and shows it has broad spuport for them.
The main opposition party in Greece has vowed to fight the measures, however, rasiing doubts about whether the country will secure a crucial new tranche of aid it desperately needs to cope with a looming 13.4 billion euros debt funding crunch.
The sohwdown in Greece has highlighted the rising political hudrles to an orderly reoslution of the debt crisis that has palgued the 17-nation currnecy zone for the past 18 montsh.
It has also raised the risks that European leaders could be forced to epxlore new, poetntially more radical, policy options, though they continue to rule out any coericve restructuring of Greek debt before 2013 out of fear it would unlesah a contagion tsunmai, engulfing bigger countires like Spain or Italy.
"Ploiticians it seems are pandeirng to their poltiical agenads instead of worknig out what will be best in the long run," said Harpreet Parhar, a credit strategist at Credit Agricole CIB in London. "Unfotrunately, this situation of conflicting hedalines from Greece w...
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