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UPDATE 2-New austerity a precondition for Greek aid-Germany

Published 04/25/2010, 02:10 PM

* New Greek fiscal steps "absolute prerequisite" for aid

* EU-IMF aid package valued at up to 45 billion euros

* Schaeuble denies aid for Greece a waste of taxpayer money

* Westerwelle points out aid not yet decided

(Adds comment from Westerwelle)

BERLIN, April 25 (Reuters) - Greece must agree to tough new austerity measures before it receives any financial aid from the European Union and failure to do so would endanger such support, German Finance Minister Wolfgang Schaeuble told a newspaper.

The debt-saddled euro-zone member has already announced billions of euros in austerity measures, including tax hikes and public sector wage cuts, but is talking with the EU and IMF about additional steps.

"The fact that neither the EU nor the German government have taken a decision (on providing aid) means that the response can be positive as well as negative," Schaeuble told the Sunday edition of Bild newspaper.

"This depends entirely on whether Greece continues in the coming years with the strict savings course it has launched. I have made this clear to the Greek finance minister."

Later in the day Foreign Minister Guido Westerwelle echoed Schaeuble's call, urging Greece to come up with a budget consolidation plan that will persuade countries to pitch in.

"It has yet to be agreed that Greece will actually get assistance in Europe at all. We will not write a blank checque," he said in an interview on ZDF television.

Greece bowed to pressure from financial markets on Friday, making a formal request for the activation of a joint aid package from the EU and International Monetary Fund (IMF) that is valued at up to 45 billion euros ($60.49 billion).

Opposition to aid for Greece runs deep in Germany. Chancellor Angela Merkel, who faces a crucial regional election on May 9, has been at pains to stress that aid will only flow if Athens takes further steps to cut a budget deficit which soared to 13.6 percent of gross domestic product (GDP) last year.

Schaeuble said a "tough restructuring programme" for the next years was "unavoidable and an absolute prerequisite" if Germany and the EU were to approve the aid Greece has requested.

But he also made clear that Germany had to be ready to support Greece to ensure the stability of the singe currency.

"We are defending the stability of the euro, because Germany benefits (from the currency) at least as much as all the others. Help for Greece is therefore not a waste of taxpayer money, but a move based on fundamental German interests. (Writing by Noah Barkin and Brian Rohan, editing by Ralph Boulton)

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