EU reassures Greece of aid, if needed

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The European Union's executive reassured Greece on Wednesday that the bloc was ready to help Athens overcome its financial problems but provided no details of how this would be achieved.

"The European Commission has been actively working with euro area member states on designing a mechanism of coordinated assistance," European Commission President Jose Manuel Barroso said.

Speaking after talks with Greek Prime Minister George Papandreou, Barroso said the situation had calmed down in Greece, where a swelling budget deficit has caused fears of a default, tensions in the euro zone and talk about an EU bailout.

Papandreou said Athens counted on an EU or euro zone aid programme being approved if necessary to help his country, but did not rule out other options such as seeking aid from the International Monetary Fund.

"We have left all options open but we expect the euro zone can deal with this possibility, which might never occur," he told a joint news conference.

He said he might have to seek other solutions if borrowing costs become unbearable for Greece. He also vowed to push full steam ahead with his government's austerity programme, despite the pain it causes the Greek people.

He added that Greece's problems should pave the way for strengthening economic policy coordination in the euro zone.

Barroso said the Commission would propose reinforcing such cooperation next month.

Responding to suggestions from German Chancellor Angela Merkel that a way should be found to exclude a country from the euro zone, Papandreou said his country would not leave the 16-nation currency area.

"Certainly there is zero possibility of (Greece) leaving the euro zone," he said.

Greece hopes EU leaders will approve an aid mechanism for the country at a summit next week after the bloc's finance ministers discussed the issue this week.

But diplomats say some countries - especially Germany, the EU's biggest paymaster - are wary of making any concrete promises.