New Greek strikes as EU ponders rescue fund

(ATHENS) - Greek civil servants launched new strikes Monday as Prime Minister George Papandreou sought backup from Washington and the European Union discussed proposals for a support fund.

Drawing on the lessons of the Greek debt crisis, the European Commission is to present by Tuesday proposals for a "European IMF," a body that could rescue debt-hit countries, a commission official said on Monday.

Greece's fiscal woes, which nearly spiraled out of control late last year after a solvency scare in Dubai put a broader spotlight on countries struggling with sovereign debt, have undermined the euro and caused concern in Brussels.

The hard-pressed Socialist government, which faces a mounting barrage of strikes and work stoppages over its austerity cuts, has spelled out that it could appeal to the International Monetary Fund if no EU help comes.

Later Monday Papandreou holds a meeting with US Secretary of State Hillary Clinton in Washington, and meets with President Barack Obama and Treasury Secretary Timothy Geithner on Tuesday as part of efforts to drum up support for Greece from its international partners.

"Things are happening quickly," commission spokesman Amadeu Altafaj Tardio said Monday, noting that eurozone members sought "to draw lessons from what happened (in Greece) and to take advantage of this opportunity."

The EU gave a tentative deadline of the end of June for full details on how such a European instrument would be funded, and by whom.

In Athens, tax collectors began a two-day walkout, court employees launched a week-long series of work stoppages and garbage collectors also mobilised against the spending cuts that are meant to save 4.8 billion euros (6.5 billion dollars).

State employees, which number around one million, are the main target of the Socialist government's belt-tightening drive.

The walkouts come ahead of a general strike on Thursday -- the second in two weeks -- called by the country's two main unions, the General Confederation of Greek Workers (GSEE) and the civil servants' union Adedy.

Gas station owners and teachers are also planning industrial actions and police union members have been called to demonstrate on Thursday.

After taking office last year Papandreou's socialist government discovered the country's finances were in much worse state than thought, forcing it to introduce emergency measures including sweeping tax hikes and public sector cutbacks.

The cuts have already sparked protests and strikes disrupting air and ground transport, as well as schools and hospitals.

The Greek government is struggling to service its debt of nearly 300 billion euros and has pledged to reduce its budget deficit from 12.7 percent of output -- over four times the allowed EU level -- by four points this year.

The country's central bank governor said Monday said Greece would manage its debt crisis without a bailout.

"A scenario in which help is required will not become reality," George Provopoulos told the Financial Times Deutschland.

He added he was confident that Athens would be able to raise some 20 billion euros needed to refinance its debt mountain in April and May -- seen by many as an acid test for the country's ability to remain solvent.

Athens successfully raised five billion euros in borrowings on the international bonds market last week, although these were offered at yields of more than six percent.

Overall Greece is looking at borrowing more than 50 billion euros this year but social upheaval is likely to undermine investor confidence.

"With a general strike planned for Thursday and some 20 billion euros of debt set to mature in April and May, market confidence looks likely to remain pretty fragile without even firmer pledges of support from the rest of the eurozone, particularly Germany," said Capital Economics analyst Ben May.

After meeting Papandreou on Friday German Chancellor Angela Merkel said she was "optimistic" Greece would not need assistance from its European partners.

On Sunday, French President Nicolas Sarkozy said the 16-nation eurozone would help if needed and were working on a "certain number of specific measures" to address Greece's debt crisis, but did not provide details.

Papandreou's approval ratings remain high at home, with a Sunday poll showing 52 percent of Greeks have confidence in his efforts to pull the country of its debt crisis.