EU AUTHORITIES are struggling to contain the worsening financial crisis in Greece as negotiators press for harsh conditions and cross-party support for any new aid deal while the country’s opposition digs in against new austerity measures.

Increasingly urgent talks between the EU-IMF bailout troika and the Athens authorities come as the country faces a multibillion-euro funding shortfall as early as next month and a longer-term cash crunch next year in view of its exclusion from private debt markets.

To secure any new loan package, sources say the country may have to offer collateral and accept external supervision over tax collection and its stalled €50 billion privatisation programme.

The initiative is hampered by the lack of an advanced land registry in the country, leading to legal uncertainty over the ownership of many public assets.

Such conditions would go much further than anything laid down in the original Greek rescue, agreed little more than a year ago, or in the subsequent rescues of Ireland and Portugal.

Despite mounting pressure on the country’s socialist government, sources close to the talks said it was still refusing to recognise the severity of the measures required to assert control over the Greek public finances. “They’re still arguing over the detail,” said one European official.

Another said the Greek stance was markedly different to that encountered by the troika in Ireland. “They have a different attitude. It’s not like the current Irish Government. The Greeks, they tell you whatever you want to hear and then they go home.”

In a vivid illustration of the depth of the political divisions in the country, the main opposition party is now campaigning for tax cuts instead of the increases deemed necessary to tackle the budget deficit.

“You want to raise taxes and reach consensus with us, who have set reducing taxes as a priority? Don’t even think about it,” said Antonis Samaras, leader of the conservative New Democracy party.

“Lower tax rates are the key to starting the engine of the Greek economy. If you raise taxes, there will be no room for consensus or for renegotiation,” he added.

“If we do everything else but don’t lower taxes, we won’t be able to give the economy the needed jump-start. This memorandum is like Sisyphus’s punishment: no matter how much you push the boulder up the hill, it will roll back down.”

The talks in Athens take place against the backdrop of continued tension between member states and the European Central Bank (ECB) over the bank’s resistance to voluntary measures in which Greek bondholders would be asked to ease the immediate burden of their debt.

The bank, which believes any Greek default on its obligations could trigger a cascade of turmoil in the euro zone, has for weeks held the line that there is no room for manoeuvre on that policy.

The doubt over the outlook for the country sent yields on its 10- year bonds 0.05 percentage points higher to 16.46 per cent and the yield on its two-year notes 0.9 percentage points higher to 25.43 per cent.

In view of Greece’s uncertain financing outlook over the next 12 months, the IMF is known to be threatening to refuse to release its €3 billion portion of the €12 billion due next month. However, European officials have some confidence that this money will eventually be released.

Uncertainty also surrounds the extent to which Germany, the Netherlands and Finland – which have been resisting the notion of a new loan package for Greece – would back an additional aid plan next year in which it might receive as much as €65 billion.

Informed sources said an imminent troika review is set to conclude that Greece is not meeting the conditions required to release some €12 billion due next month under its bailout, raising questions over the country’s immediate funding needs.

The troika wants the Greek government and opposition to agree on a fixed timetable for the execution of stringent policy measures in return for this aid, but consensus has proved elusive. This presents a difficulty for the troika because it needs to ensure the execution of the bailout programme if sceptical creditor governments are to give their blessing to the release of the next tranche of aid.