The Greek government has yet to ask for activation of the aid package, but the cost of interest has made it highly probable that Greece will trigger the rescue mechanism once the technical details are sorted out, Athens-based correspondent Malcolm Brabant told Deutsche Welle.

"Greece had hoped it could continue to borrow money at a reasonable level from the international markets in order to maintain some sort of fiscal independence," he said. Athens would prefer this to going to its eurozone partners and the IMF for debt rescue.

But the amounts the markets are currently charging Greece to borrow money longterm - over eight percent for a ten-year-bond - are "simply unsustainable", Brabant said. "This is Black Wednesday for Greece."

Not much room to manoeuvre

"There is no question of Greece being left high and dry in May," Greek Finance Minister George Papaconstantinou told a news conference on Tuesday. "Either it will borrow from the markets or borrow from our partners."

The eurozone members of the EU have earmarked a package of 30 billion euros ($40.33 billion) should aid become necessary; the IMF has pledged about 15 billion euros.

Talks with the EU Commission, the European Central Bank and the International Monetary Fund are currently underway in Athens, where the government is trying to raise the 10 billion euros it needs to roll over debt, make bond interest payments totalling 8.5 billion euros, and finance its deficit in May.

The Greek government has already implemented painful austerity measures, including public wage cuts, a pension freeze and tax hikes

Approval process

The need for some European governments, including Germany, to obtain approval from their parliaments could make it difficult for Athens to tap the funds before the biggest part of the refinancing, an 8.5 billion euro bond, becomes due on May 19.

The German contribution to the Greek debt rescue would amount to eight billion euros worth of credit.

But approval from Berlin might be hampered by a crucial May 9 state election in a country where public opinion is opposed to helping a country that has flouted EU budget rules for years.

Strike action

In Greece, the unions have launched two days of strikes. The public sector is set to shut down on Thursday for 24 hours, which is the civil servants' fourth action this year. According to Brabant, there is considerable potential for social unrest in the country as many Greeks believe an aid deal would lead to a further deterioration of their living standards.

And many are worried about the involvement of the IMF in the rescue package, Brabant said.

"They are concerned that they will really be hawkish in the way in which they demand that severe cuts are made in return for their contribution to this bailout package."

Austerity measures already in place were, he said, designed to fill government coffers. But they seemed to be backfiring: "Everybody is terrified of spending money, businesses are going bust, there's no confidence on the streets; this is a very depressed country and things only look as thought they are going to get worse."

db/Reuters/AFP/AP

Editor: Susan Houlton