Greece can 'count on' Euro 'solidarity'

(BRUSSELS) - The EU executive policing Greek action to avoid bankruptcy assured Wednesday that the country could count on the "solidarity" of its European peers, leaving analysts anticipating a financial bailout.

The head of the European Commission, Jose Manuel Barroso, said the European Union, more particularly the leading partners within its 16-nation euro currency area, would come through if Greece still needed more help.

"Greece can count on this solidarity," Barroso underlined.

Barroso was speaking after the Greek government announced a pensions freeze, spending cuts and tax rises to slash 4.8 billion euros (6.5 billion dollars) from this year's public budget in a bid to reassure both peers and markets.

"We have always shown solidarity to all EU member states and we'll show that in the future," Barroso told reporters.

Barroso said new plans, to help reach Greece's existing target of reducing its budget deficit by four percentage points this year, "confirms the Greek government's commitment to take all necessary measures to deliver" on its objectives.

"Greece's ambitious programme to correct its fiscal imbalances is now on track," he said.

Greek Prime Minister George Papandreou had earlier told his President Carolos Papoulias: "We are justly awaiting European solidarity, the other side of this agreement."

Pressed to indicate what kind of aid could be used to help Greece in the event of bailout assistance being required, amid persistent reports of a Franco-German plan having been agreed, Barroso insisted that "concrete instruments" -- thought likely to feature a mixture of loans, guarantees or bond purchases -- will be presented "in due time."

Jean-Claude Juncker, head of the eurozone finance ministers' group, was similarly welcoming.

Athens was now "credibly on track," the Luxembourg premier said, after "a strong signal of the readiness of the Greek government to proceed with courageous decisions."

He stressed the agreed EU line that "euro area members stand ready to take determined and coordinated action, if needed, to safeguard the financial stability in the euro area as a whole."

Papandreou is scheduled to travel to Berlin on Friday and Paris on Sunday for talks with German Chancellor Angela Merkel and French President Nicolas Sarkozy.

He applied some pressure of his own, reportedly holding in reserve the option of asking the International Monetary Fund for help.

In Washington, the IMF itself welcomed Greece's "very strong" fiscal package.

Silent on the agenda for Friday's talks, the German government said the new austerity measures would inspire "confidence."

"The government is confident that they will be greeted with a clear show of confidence in the determination (of the Greek government) for consolidation," deputy government spokesman Christoph Steegmans told reporters.

As Europe's biggest economy, Germany is widely expected to bear the brunt of any bailout, but Merkel has insisted to edgy voters that no such move is on the cards.

"In the end, the high level of EU exposure to the Greek banking sector and its public sector debt may win the argument in favour of a concerted intervention," said Frederik Ducrozet, an economist with Credit Agricole.

Ahead of euro finance ministers assessing a commission progress report on March 16, Commerzbank analyst Christoph Weil said "the vote should now be positive and open the door to EU aid if necessary."

Citi European Economics analyst Giada Giani, however, warned that outside forces could yet destabilise Greece, adding that "major social unrest remains a risk to the successful implementation of the fiscal plans."