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Luxembourg - Europe split down the middle on Monday as Germany railed against "taking the pressure off" Greece by providing early emergency loans while Italy lashed Berlin for "intransigence."
"Making promises of concrete aid too soon will only have the effect of taking the pressure off Greece," German Foreign Minister Guido Westerwelle said of Athens' call for €45bn in rescue funds from euro currency partners and the IMF this year.
"Above all, we need to see budget consolidation taking place in Greece," said Westerwelle, whose governing coalition faces a tricky regional election on May 9 in North Rhine-Westphalia.
Otherwise Athens might not act "with the necessary application and discipline" over future years, Westerwelle warned.
The Greek government formally sought help on Friday, but new conditions outlined in Germany have introduced fresh doubts on the timing of a bailout, which officials had said could be settled within days.
Political opponents who are pushing for tax cuts for small and medium-sized businesses have threatened to mount a challenge in Germany's constitutional court, with parliamentary approval also required.
As markets sense renewed obstacles, the euro again slipped against the dollar and Greece's cost of borrowing hit 9.385% with the rate for two-year loans verging on 13% - whereas the funds from the other 15 euro countries were to have been pegged at around 5.0% interest.
As Europe's largest economy, Germany was expected to contribute around €8.4bn, but its stance is causing consternation among euro partners.
'This is not a rescue operation'
Italian Foreign Minister Franco Frattini said German Chancellor Angela Merkel's government was threatening the entire euro currency area, which is also beset by worries over deficits and debts in other countries led by Portugal, Ireland and Spain.
"I am concerned by the intransigence Germany is showing," Frattini said.
"There can be no doubt - if the (shared) house is in difficulty we have to save the walls because we are all in this (shared) house.
"This is not a rescue operation (for Greece), this is a consolidation of Europe's walls, the walls of the euro, it's a rescue for all of us," he underlined.
Frattini was amplifying a growing trend toward open criticism of German priorities, which normally staunch ally and Luxembourg Prime Minister Jean-Claude Juncker recently said had become a concern.
"When you cast a domestic eye over European issues instead of a European eye over domestic questions, that worries me," said Juncker, who also acts as finance chief for the 16 eurozone countries.
He told Financial Times Deutschland earlier this month that Germany was showing "great reticence" on a raft of European matters.
The European Commission and the European Central Bank are due to deliver their assessment of Greece's needs within days, but a senior EU official warned on Sunday that Germany would have to "explain" its opposition "if the euro area as a whole is destabilised" by prolonged refusal to step in.
On Sunday, International Monetary Fund managing director Dominique Strauss-Kahn said there was a "need for speed" but stressed he was "confident" that negotiations could be concluded "in time to meet Greece's needs."
More than €8bn of Greek debt was set to mature by May 19.
Greek Prime Minister George Papandreou was meanwhile berated by conservative opposition leader Antonis Samaras, who accused the socialist government of placing the country under the "suffocating control" of the IMF.
- AFP
