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Eurozone sets conditions for Greek bailout

Luxembourg's Prime Minister and Eurogroup chairman, Jean-Claude Juncker (left) talks with Greece's Finance Minister Evangelos Venizelos at the start of a Eurogroup meeting at the European Union council headquarters in Brussels February 9, 2012. Euro zone finance ministers and officials meet on Thursday to discuss a second financial bailout package for Greece, after leaders in Athens clinched a long-stalled deal on reforms and austerity measures (REUTERS)


Eurozone finance ministers on Thursday put off a decision on a new bailout to save Greece from bankruptcy, giving Athens less than a week to meet three conditions in return for the aid.

The demands were set during talks between Greek Finance Minister Evangelos Venizelos and his 16 eurozone counterparts in Brussels, hours after rival Greek politicians struck a deal on austerity measures demanded by foreign lenders.

"Despite the important progress achieved over the last days, we did not have yet all necessary elements on the table to take decisions today," Eurogroup chief Jean-Claude Juncker told a news conference.

The eurozone will hold a new meeting next Wednesday if all conditions are met, said Juncker, Luxembourg's prime minister.

Venizelos had urged his counterparts to endorse the debt relief deal, but the ministers first demanded that the Greek parliament approve the austerity measures agreed by the political parties when it convenes on Sunday.

The two other conditions are additional structural spending cuts of 325 million euros for 2012 and "strong political assurance" from coalition leaders that they will implement austerity measures, Juncker said.

Greek political leaders reached a last-minute deal Thursday on new austerity measures demanded by international lenders in return of the 130-billion-euro (ê171 billion) bailout.

In parallel, Greece has negotiated a debt writedown with its private lenders, hoping to slash 100 billion euros from its 350-billion-euro debt mountain.

But after seeing Greece drag its feet on reforms for the past two years, finance ministers want proof that Athens will follow through on its promises this time, warning that April elections should not thwart the reforms.

"All these measures are important to ensure a smooth implementation of the progamme, also after the upcoming (Greek) general elections," Juncker said.

"These three elements that I mentioned need to be in place before we can take decisions," he added.

EU economic affairs commissioner Olli Rehn said eurozone partners were also "seriously considering" opening an escrow account for Greece, which would block a portion of state revenues to guarantee the repayment of bailout loans.

The Franco-German proposal is "one possibility for reinforcing surveillance and effectively implementing the programme," he said.

Greece needs the aid soon since it has bond payments of 14.5 billion euros due March 20.