European governments laid the groundwork for a financial lifeline to debt-stricken Greece while voicing optimism that the Greek government's budget cuts will make a bailout unnecessary.
Officials from the 16 countries using the euro worked out a strategy for emergency support amid hopes that Greece's plan for €4.8 billion euros in tax increases and wage cuts will stave off fiscal disaster.
"We clarified the technical arrangements that would enable us to take coordinated action which could be swiftly put into place in the event it is necessary," Luxembourg prime minister Jean-Claude Juncker told reporters today after leading a meeting of euro-area finance ministers in Brussels.
Faced with the harshest test in the euro's 11-year history, the European Union broke its taboo against aid to cash-strapped governments while insisting that Greece will overcome its debt crisis on its own.
"It's a very tricky game for politicians right now," said Carsten Brzeski, an economist at ING Group in Brussels who used to work at the European Commission. "They have to play for time."
Loan guarantees wouldn't be part of the EU package, Mr Juncker said.
Bloomberg