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EU Wants Sronger Measures to Fix Greek Economy

EU economic and monetary affairs commissioner Olli Rehn (R) meets with Greek Prime Minister George Papandreou (L). Greece must do more to reduce its deficit and end a fiscal crisis 01 Mar 2010

EU Commissioner Oliver Rehn is in Athens to discuss Greek proposals to straighten out its government finances.

The European Union has urged Greece to implement greater austerity measures immediately to tackle a debt crisis that has shaken the entire bloc.

EU Finance Commissioner Olli Rehn made the call after a first round of talks with Greek officials amid growing market expectations of a trade-off between new deficit cutting steps and practical EU support for Greek borrowing.

The strength of the European currency has been under pressure since Greece's financial problems were revealed, with concern the problem could spread to other euro-zone countries.

Last week, the Greek Prime Minister called for more solidarity from the European Union over his country's debt crisis and announced plans to visit Germany, whose backing is vital for EU financial aid.

Greek newspapers have spent the past week speculating on what further hardships citizens will face, including pension cuts, salary freezes and the prospect of job cuts.

Athens News Agency journalist Harry Theofanous says he cannot recall a worse crisis in the past two-decades. "I think the mood is very somber, I would call it," Theofanous said. "It is also a very deep crisis, its not just a wide lake - there is also depth to it."

Prime Minister George Papandreou has said he will do whatever it takes to save the economy, no matter how painful.

Greece has said it would reduced the government budget deficit from 12.7 percent to 8.7 percent during the next nine months.

There have been reports that Germany is considering buying Greek government bonds through a state-owned bank, as an emergency measure.

In two weeks, the European Union will consider whether high-debt countries will be forced to take austerity measures like introducing wage cuts, employment freezes and longer working weeks. By last weekend, the euro was trading at about $1.36, compared to $1.45 in December.