France, Germany say ‘time running out’ for Greece to approve austerity package

Eurozone power couple France and Germany urged Greek leaders on Monday to “live up to their responsibilities” and said that time was running out in talks on an unpopular austerity package designed to slash its deficit.

Speaking at a joint news conference after talks in Paris, President Nicolas Sarkozy and Chancellor Angela Merkel also said Athens should block its credit interest payments in a special account to ensure it can service its debts.

“We want this accord,” French President Nicolas Sarkozy said. “Greece’s leaders have made commitments and they must respect them scrupulously ... Europe is a place where everyone has their rights and duties. Time is running out, it needs to be concluded, it needs to be signed.”

Merkel warned that Greece can receive no more EU aid to cope with the crisis until it reaches a deal with the European Commission, the European Central Bank and the International Monetary Fund on tightening up its budget.

“We want Greece to stay in the euro. To say it clearly, this is the opinion of both of us,” German Chancellor Merkel said.

“But I also say - there can be no new Greece program if agreement is not reached with the Troika ... All those who bear responsibility in Greece must know - we will not deviate from this position.”

Merkel said both she and Sarkozy would remain united and determined in their approach to Greece.

Greek Prime Minister Lucas Papademos struck a tentative deal with party leaders to extend spending cuts after euro-area finance chiefs told them an increase in the 130 billion-euro ($170 billion) aid package wasn’t forthcoming. Chiefs of the three parties supporting Papademoss government meet again today to work on details of an agreement. Chinas economic growth would be cut almost in half if Europes debt crisis worsens, the International Monetary Fund said.

We are entering into a fairly critical 24 hours for Greece, Jim Reid, a strategist at Deutsche Bank AG in London, wrote in a report. The focus has shifted from the private sector involvement negotiations toward the lack of political consensus and whether the interim coalition government will accept the conditions for its second bailout package, he said.