Germany says it is now ready to Greece’s debt-burdened economy but only as last resort and with IMF involvement.
German Chancellor Angela Merkel has so far rejected calls from fellow European leaders to help Athens. She has insisted IMF loans should complement any EU assistance.
Berlin will set out conditions for aid at a meeting of the 16 Eurozone countries on Thursday.
They will include a stipulation that Athens exhausts all other means of borrowing before tapping aid funds and a call for tougher sanctions to be levied on states that breach EU rules on fiscal discipline.
Spanish Prime Minister Jose Luis Rodriguez Zapatero said he hoped the EU would assume its “political respsonsibility” to tackle the Greek problem together.
He also said he hoped the bloc’s reaction to this crisis would make a step towards common European economic government.
Greece joined in the eurozone in 2001, allowing it to borrow heavily from international money markets.
The government then went on a decade-long spending spree that has driven up the public deficit to 12.7 percent of GDP – equivalent to some 300 billion euros.
Prime Minister George Papandreou wants to curb that figure to less than 3 percent by 2012 through drastic budget cuts.
But those plans have been met with widespread protests and national strikes.