Merkel urges Germany to support Greece with bail-out

Chancellor Merkel demanded tough action by Greece in exchange for loans

Chancellor Angela Merkel has urged the German parliament to back the EU's emergency loan package for Greece.

"Quite simply Europe's future is at stake," Ms Merkel said. "Europe is at a fork in the road."

Parliamentary approval is needed for the EU and IMF to start disbursing the 110bn-euro ($143bn; £95bn) bail-out.

The rescue is conditional on Greece cutting public sector wages and pensions and boosting tax receipts. It risks defaulting on its huge debts.

The German parliament will vote on the bail-out package on Friday. It has already been approved by the German government.

Some opposition deputies shouted out protests as Ms Merkel defended her position.

Opposition Social Democrat (SPD) leader Frank-Walter Steinmeier accused her of poor crisis management and refused to commit the SPD to the Greek bail-out.

Greece is gripped by a general strike as protests against the tough austerity measures continue.

Eurozone cautious

Under the bail-out agreed on Sunday, Greece's 15 partners in the eurozone will lend it 80bn euro spread over three years and the International Monetary Fund will lend 30bn euro.

Germany's contribution has been set at 22.4bn euro, including 8.4bn euro this year.

Eurozone leaders will hold a special summit on Greece this Friday, where they are expected to give formal approval to the bail-out deal.

But Slovakia's Prime Minister Robert Fico warned that "we can't give Greece any loan before we see them doing their homework".

Slovakia's parliament is not likely to vote on the Slovak contribution - about 800m euro - until next month.

The European Commission insists that the bail-out cannot be blocked now. A Commission spokesman on economic affairs, Amadeu Altafaj, said "there is already a political decision by the Eurogroup to activate the mechanism" - a reference to the eurozone finance ministers' agreement.

German Finance Minister Wolfgang Schaeuble had some tough words for Greece on Tuesday, saying "every three months, Greece's government must give a comprehensive report to the European Commission and the IMF about how it is implementing its plan".

"If there are any violations, payments will be stopped. Then Athens will once again be threatened with bankruptcy," he warned.

In her speech to the Bundestag (lower house) Ms Merkel also called for an overhaul of the EU's Growth and Stability Pact, which sets rules for member states' budget deficits and debt. Greece's budget crisis had highlighted the need for reform of the pact, she said.

She said countries "notorious" for breaching deficit targets should lose voting rights. The EU should also consider cutting their structural funds or agricultural subsidies in such cases, she said.

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