EU Warns Greece on Bailout

By COSTAS PARIS

LONDON—The European Union has warned Greece that unless political leaders give written pledges they will back agreed reforms, an €8 billion ($10.79 billion) loan payment won't be given and the country will run out of money in about 20 days, Greek and euro-zone officials said Tuesday.

The impasse stems from the refusal of conservative New Democracy leader Antonis Samaras to sign the pledge, which he fears voters will see as giving up a promise to renegotiate Greece's bailout loans if he comes to power.

"There is enough money for another 20 days," a senior Greek government official said. "Without the loan tranche we will default on the €2.8 billion bond payments in December, and we won't be able to pay out salaries and pensions. The situation is very serious and this issue has to be settled this week."

An EU diplomat said Greek Prime Minister Lucas Papademos received a renewed warning in meetings with European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy in Brussels on Monday.

The Source: ECB Bond Buys Could Trigger Trade Wars

Mr. Papademos, who heads a coalition government supported by the former ruling socialist Pasok party, New Democracy and the small LAOS nationalist party, met Tuesday with Eurogroup President Jean Claude Juncker in Luxembourg. Mr. Juncker told reporters the written pledge should be submitted by the Nov. 29 Eurogroup summit.

"I will have to chair a meeting of the Eurogroup a week from now on Nov. 29. We will discuss the sixth disbursement, and I am quite optimistic that we will be in a position from now to then to make a positive decision. ... We have asked to be given a letter of commitment by the new Greek prime minister ... this view should be shared by the main political leaders," Mr. Juncker said.

Dutch Finance Minister Jan Kees de Jager also said future financial aid for Greece will be terminated if Mr. Samaras doesn't support the reforms in writing. "I don't understand why they are so difficult," he said in a television interview, referring to Mr. Samaras and his party. "We have to be assured that they are committed to undertake reforms."

A New Democracy official acknowledged the pressure on Mr. Samaras is mounting and said the party was looking for a "face-saving compromise" that could come this week.

The euro zone wants the leaders to commit that whoever wins power in scheduled elections in February will carry on with the reforms.

"There is a major issue of mistrust towards Greece," said the EU diplomat. "So the usual promises from Athens that have been repeatedly broken won't suffice."

The loan slice represents the sixth disbursement of aid under an existing €110 billion bailout Greece received in May 2010 from its euro-zone partners and the International Monetary Fund. An IMF official said the fund's board is likely to meet next week to decide on the tranche's release.

—Matina Stevis in Luxembourg and Archibald Preuschat in Amsterdam contributed to this article.

Write to Costas Paris at costas.paris@dowjones.com

Τρίτη 22 Νοεμβρίου 2011