Rehn maintains there is no Plan B

EUROPEAN Union economic affairs chief Olli Rehn pressed the Greek parliament to adopt a tough austerity programme, saying it was the “only way to avoid immediate default.”

“This week Greece faces a critical juncture. Both the future of the country and financial stability in Europe are at stake,” Rehn said in a statement.

“I trust that the Greek political leaders are fully aware of the responsibility that lies on their shoulders to avoid default,” he said.

“The only way to avoid immediate default is for Parliament to endorse the revised economic programme.”

Rehn slapped down speculation that Europe was working on a contingency plan in case Greek lawmakers reject €28.6 billion in budget cuts and tax rises as well as a €50bn privatisation programme.

“To those who speculate about other options, let me say this clearly: there is no Plan B to avoid default,” the EU official said.

A high-ranking European official, speaking on condition of anonymity, has said that a Plan B was in the works, stressing that “the next step is not a default of Greece”.

German Finance Minister Wolfgang Schaeuble said the eurozone must be “prepared for the worst” and would cope even if Athens defaulted on its debt.

Rehn reiterated that passing the austerity measures was a pre-condition for the EU and IMF to release €12bn from last year’s €110bn bailout, which Athens needs by July to avoid financial collapse.

“They must be approved if the next tranche of financial assistance is to be released,” he said.

“The European Union continues to be ready to support Greece. But Europe can only help Greece if Greece helps itself,” he said.

Socialist Prime Minister George Papandreou, who has a five-seat majority in parliament, pleaded with lawmakers to back the measures, but the conservative opposition has criticised the plan.

Eurozone finance ministers are holding a special meeting on Sunday, awaiting to see the result of the Greek vote before deciding on unblocking the loans and devising a second bailout requested by Papandreou, which could also amount to €110bn.

“The preparation of a new programme will intensify in the coming weeks,” Rehn said.