Greece to face European Commission economic scrutiny

Greece will face the most stringent monitoring of any European Union country as it attempts to balance its finances over the next few years.

The news came as the European Commission confirmed its support of Greece's plans to reduce its deficit.

EU economic commissioner Joaquín Almunia also launched an infringement procedure to ensure Greek authorities report reliable budgetary statistics.

Greece's deficit is more than four times higher than eurozone rules allow.

Progress reviews

Mr Almunia welcomed the additional fiscal measures taken by Greece.

He said: "We consider that the programme is ambitious, and that the programme in terms of targets is achievable.

"We are endorsing the Greek programme. But at the same time we know that the implementation of the programme is not easy. It is difficult. This deserves support."

However, Mr Almunia acknowledged that tackling the debt was difficult politically and complex technically.

He said that EU officials would monitor carefully the efforts of the Greek programme and would demand extra action if it was not on track to meet the deficit goals.

EU economic ministers will next meet on 16 February. Provided they accept the commission's recommendations, new deadlines will be set for Greece to review progress with officials.

It will have to submit a first report on 16 March, with a second deadline on 16 May.

Nigel Cassidy, the BBC's Europe business reporter, said the reliability of Greece's budgetary statistics was a long-standing issue.

"This was the problem before. Everybody here in Brussels knew Greece was not being very honest with its economic figures but nobody did anything about it," he said.

Fear of contagion

Greece is struggling with its worst economic crisis since joining the euro in 2001.

It has one of the smaller economies in the European Union, but it is being watched closely because of the doubts financial markets have in it.

Its long-term deficit cutting plan aims to reduce the budget shortfall, currently 12.7%, to less than 3% by 2012, but many people in Brussels and beyond remain sceptical.

There are other bigger economies in the eurozone that face the same deficit problems and the fear of contagion is high.

Prime Minister George Papandreou has urged the public to support his programme of tough austerity measures, which includes increases on fuel duty and a public sector pay freeze.

However, public sector workers are planning a strike nex

'No way out'

Mario Levis, Professor of Finance at Cass Business School, said it was going to be very challenging for the government to achieve its targets.

"To bring the deficit down in the next three years is extremely difficult. Increasing taxes is not enough. They have to increase productivity," he said.

And he added that more may need to be done to get the public on board.

"I think Greeks will appreciate, if it's fully explained to them, the severity of the situation. There's no way out.

"But the prime minister has said there's widespread tax evasion in the public sector... [and] there are not enough measures being announced yet to cut down on tax evasion."

t week.

world hottest news: US wary as Iran president agrees nuclear deal terms

world hottest news: US wary as Iran president agrees nuclear deal terms

US wary as Iran president agrees nuclear deal terms

The US has reacted warily after Iran appeared to accept a deal to swap enriched uranium for nuclear fuel.

President Mahmoud Ahmadinejad said Iran would have "no problem" if most of its stock was held for several months before being returned as fuel rods.

The US said that if this was a new offer, it was "prepared to listen".

Soon after the statement, Iranian state TV announced the successful launch of a satellite rocket carrying an "experimental capsule".

The West is concerned about Iran's growing missile technology and possible links to its nuclear programme.

Iran insists its nuclear development and rocket programme are entirely peaceful.

A deal struck in October between Iran, the International Atomic Energy Agency (IAEA) and the so-called P5+1 - the US, Russia, China, UK, France plus Germany - envisaged Iran sending about 70% of its low-enriched uranium to Russia and France where it would be processed into fuel for a research reactor.

But last month, diplomats said Iran had told the IAEA that it did not accept the terms of the deal and had instead demanded a simultaneous exchange on its territory.

Then, in a state TV interview on Tuesday, President Ahmadinejad dismissed the concerns of his "colleagues" that the West would retain the uranium.

"We have no problem sending our enriched uranium abroad," he said.

"We say, 'We will give you our 3.5% enriched uranium,' and will get the fuel. It may take four to five months until we get the fuel."

BBC Tehran correspondent Jon Leyne, reporting from London, says there will still be scepticism about whether President Ahmadinejad's offer is anything more than a delaying tactic designed to fend off fresh sanctions.

In an initial reaction to the comments, US State Department spokesman P J Crowley said the US was "not prepared to change the deal. We are not interested in renegotiating it".

In a later response, a White House official told the BBC: "If Mr Ahmadinejad's comments reflect an updated Iranian position, we look forward to Iran informing the IAEA."

The official added: "If Iran has something new to say, we are prepared to listen."

Russian also gave a guarded response to the Iranian offer.

"If Iran was to return to the scheme that was proposed in October, then we would welcome that," said Russian Foreign Minister Sergei Lavrov.

The British Foreign Office said that if Iran was ready to take up the offer, it "looked forward" to Tehran telling the IAEA.

"If Iran is willing to take up the IAEA's proposed offer, it would be a positive sign of their willingness to engage with the international community on nuclear issues," a spokesman said.

German government spokesman Ulrich Wilhelm said Iran's offer had to be in the form of "concrete commitments" to the IAEA.

"This forms only part of the international commitments that Iran has towards the international community," he said. "It has to comply with other areas covered by UN Security Council resolutions."

Mr Ahmadinejad also said there were negotiations about a possible prisoner swap for several Iranians jailed in the US for the three American hikers currently being held in Iran.

"There are some talks under way to have an exchange, if it is possible," he said. "We are hopeful that all prisoners will be released."

Mr Ahmadinejad did not go into detail, but in December Tehran released a list of 11 Iranians it says are being held in US prisons, including a nuclear scientist who disappeared in Saudi Arabia and a former defence ministry official who vanished in Turkey.

The US has denied any knowledge of their whereabouts.