Brussels - AFP
Pressure rose on Greece on Tuesday to enact deep budget cuts in return for a bailout, just as new economic data revealed acute distress and there was new talk of exclusion from the eurozone. Eurogroup finance ministers, scheduled to meet on Wednesday, are intransigent in preventing Greece from wriggling out of hugely unpopular cuts, approved by the Greek parliament in the face of violent protests on Sunday. Extra pressure came from Moody\'s rating agency which fired more warnings at the 17-nation monetary union. Moody\'s, the world\'s biggest credit agency, downgraded Italy, Spain and Portugal, and issued warnings to France and non-euro Britain. European Union leaders nonetheless received a boost to confidence when Chinese Premier Wen Jiabao told them that Beijing would \"increase\" its involvement in action to douse the eurozone debt crisis. The enormous problems confronting Greece were illustrated by new data showed that the economy, in recession for a fifth year, shrank by 7.0 percent in the fourth quarter of 2011 compared output a year earlier. Luxembourg Finance Minister Luc Frieden said late on Monday that if Greece cannot deliver on its promises, then the eurozone will move on without Athens. \"I still think we should do our best to keep the eurozone with all of its members,\" Frieden said in Washington late on Monday. \"Our preferred scenario is Greece complying, the eurozone giving additional funds and -- I cannot insist enough on this aspect -- clear monitoring of the implementation of what Greece has promised to do,\" he said. \"If they don\'t do all this, I think then we must go on with 16 countries.\" Luxembourg is small but it is one of just four eurozone states to retain a triple-A credit rating, and its Prime Minister Jean-Claude Juncker chairs Wednesday\'s meeting of finance ministers which will assess Greece\'s case for a second bailout. The Greek parliament approved Sunday a series of measures demanded by the eurozone and the International Monetary Fund in return for fresh aid but Greek political leaders have yet to meet a condition that they commit themselves to the programme, and there is still a shortfall in the budget cuts required. Eurozone ministers have made clear that they will not compromise over the reforms, and commitments to enact them, because Greece has failed to deliver on promises during the two years of the crisis. The second Greek bailout, after a first in May 2010, provides 100 billion euros ($132 billion) in aid and another 30 billion euros to strengthen Greek banks. It is coupled with a private creditor bond write-down expected to be worth 100 billion euros. The measures are supposed to deliver savings to help stabilise Greek public finances but there is still a shortfall of several hundred million euros in the sums and Brussels wants to know where this is to come from. Eurozone leaders are in no mood for compromise and want written commitments by Greek political leaders who have their eyes also on elections in April. European Union leaders have asked China, which holds the world\'s biggest foreign exchange reserves, to invest in a bailout fund to rescue debt-stricken states but Beijing has made no firm commitment. \"China is ready to increase its participation in resolving the EU debt problems,\" Premier Wen Jiabao said after meeting EU president Herman Van Rompuy and European Commission president Jose Manuel Barroso in Beijing. Van Rompuy told his hosts that the two sides had become \"so inter-dependent that change in the growth rate in one of the two strategic partners has a direct and palpable impact on the other one. Our economic destinies are interlinked.\" Moody\'s warned that the outlook in Europe was uncertain, bringing Asian stocks mostly down. Italy, despite its downgrade, however, raised 6.0 billion euros ($7.9 billion) on Tuesday in an auction of medium-term bonds in which rates fell sharply. Even Greece raised 1.3 billion euros in a sale of three-month treasury bills with the return for investors dipping to 4.61 percent. Bailed-out Portugal, also in recession, also has a date on Wednesday with EU, IMF and European Central Bank officials to see if it will get its next aid instalment of 14.9 billion euros as it struggles to stick to its austerity plans after huge protests at the weekend.