No bailout Plan B, EU warns Greece

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The Independent Online

The European Commission insisted today it isn't bluffing over the euro crisis - if Greece does not vote for more austerity tomorrow there is no more EU bailout money.

EU Economics Commissioner Olli Rehn said: "I trust that Greek political leaders are fully aware of the responsibility that lies on their shoulders to avoid default: the only way to avoid immediate default is for parliament to endorse the revised economic programme."

The warning came as street protests in Athen turned violent over the prospect of more tax hikes, wage cuts and job losses in a bid to avoid Greek national bankruptcy.

But the counter message from Brussels was that there is no alternative to tougher austerity measures if Brussels is to pump billions more into the Greek econcomy.

In a statement calculated to galvanise Greek MPs into voting in favour of a new national austerity package tomorrow, Mr Rehn said: "The programme includes both the medium-term fiscal strategy and the privatisation programme. They must be approved if the next tranche of financial assistance is to be released.

"To those who speculate about other options, let me say this clearly: there is no Plan B to avoid default.

"The EU continues to be ready to support Greece. But Europe can only help Greece if Greece helps itself."

The "tranche of financial assistance" refers to the latest 12 billion euro(£10.7 billion) instalment of cash aid from the 110 billion euro (£96.5 billion) bail-out fund agreed for Greece by fellow eurozone countries a year ago.

The money is needed by July 15 if Greece is to pay its immediate debts, and payment is conditional on Greece tightening the spending screw with more debt-reducing measures.

The prospect brought demonstrators out on to the streets in Athens and across the country, with the Greek cente-right opposition facing a touch choice between sticking to its pledge to vote down the 28bn-euro (£25 billion) austerity package or to change its mind and ensorse the plan.

Mr Rehn insisted today: "All in all, the Greek people and their democratic representatives now face a critical choice. Reforming the economy is certainly challenging, but it remains a far better alternative than a default, which would hit the most disadvantaged and vulnerable hardest.

"I therefore call on Greece's political leaders to assume this responsibility, and at the same time to look for next steps and to create a necessary political consensus, taking the whole nation forward to overcome the current challenges."

It is already agreed that Greece will need a second massive bail-out which eurzone coutnries are due to agree on later this year.

Last week Prime Minister David Cameron said he had won the necessary assurances to esnure that the UK will play no part in the financing.

Today Mr Rehn's spokesman Amadeu Amadeu Altafaj rejected claims that there really was a "Plan B" in case the Greek vote goes against more austerity.