Europe presses Athens on cuts

European officials jacked up the pressure on the Greek government Tuesday to deliver budget cuts in exchange for a second bailout as they insisted that default was not an option.

Finance ministers canceled a Brussels, Belgium, meeting slated for Wednesday and will hold a teleconference instead to prod Greece to do more to clinch an aid package worth 130 billion euros ($170 billion) along with roughly $130 billion of debt relief from private bondholders.

"I did not yet receive the required political assurances from the leaders of the Greek coalition parties on the implementation of the program," Luxembourg Prime Minister Jean-Claude Juncker, chairman of the euro finance panel, said in a statement Tuesday. He also pressed for "further technical work" on Greek budget cuts.

Two years after pledging to pull Greece back from the brink, European leaders are torn between pouring more aid into the struggling economy or risking an unprecedented national bankruptcy that might force the country out of the euro and prompt renewed tumult in European markets.

Finance ministers will discuss "outstanding issues" on Wednesday and hold their next meeting as scheduled Monday, Juncker said.

The leaders of Greece's two biggest political parties, New Democracy's Antonis Samaras and Pasok's George Papandreou, will send written commitments Wednesday to the so-called troika to stand by austerity measures, a government official said today.

The assurance to the troika - the International Monetary Fund, European Commission, and European Central Bank - was a condition of an international bailout. European officials were concerned that without the written pledges, the leaders would retreat from budget cuts after elections likely in April or May.

Evidence mounted Tuesday that the euro's guardians have made progress isolating Greece's woes. Italy sold 6 billion euros ($7.8 billion) of bonds at lower borrowing costs as investors shrugged off a downgrade of its credit rating by Moody's Investors Service.

Finance Minister Jan Kees de Jager of the Netherlands, one of four AAA-rated states left in the euro area, pushed back against suggestions from Athens that the aid bill would be $19.6 billion higher than planned. "We agreed upon [$170 billion]," de Jager said. "If now it seems more is needed, we should explore other ways."

Greece's prospects hinged on Prime Minister Lucas Papademos' cabinet finding $425 million of the extra budget cuts demanded by European governments and the IMF as conditions for fresh loans.

By Tuesday evening, the cabinet agreed to trim pensions at state-owned companies and banks by $392 million, according to an official who declined to be named.

Parties backing Papademos' interim government also need to endorse the savings. Creditor governments want Greece's feuding parties to pledge planned cuts in writing. Greece needs the aid to enable it to make a $18.9 billion bond payment in March.