UPDATE 1-EU operative on resource to assistance Greece if indispensable

Tue Mar 9, 2010 10:26am EST Related News EU says doing everything for euro zone stabilityTue, Mar 9 2010UPDATE 1-EU backs new Greek deficit cuts, pledges solidarityWed, Mar 3 2010Eurogroup welcomes Greek steps, implementation keyWed, Mar 3 2010HIGHLIGHTS-EU finmins discuss fiscal crisis in GreeceTue, Feb 16 2010Snap Analysis: EU political support for Greece falls shortThu, Feb 11 2010

(Adds quotes, details, previous dateline BRUSSELS)

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STRASBOURG, France, March 9 (Reuters) - The European Unionexecutive is working with euro zone member states on a mechanismto help Greece if necessary, European Commission President JoseManuel Barroso said on Tuesday.

"The Commission has been actively working with euro areamember states to design a mechanism which Greece could use incase of need," Barroso told the European Parliament.

"Such a mechanism would be in conformity with the currentLisbon Treaty, in particular with the "no bailout" clause. Itwould include stringent conditionality."

At the same time he said Greece was taking the necessarysteps to reduce its budget deficit this year and appeareddetermined to tackle its structural problems, both actions thatshould help prevent the need for financial aid.

"We are doing what is necessary to secure the financialstability of the euro area as a whole," Barroso said.

He indicated that the Commission would soon set outproposals for the creation of a European monetary fund orsimilar institution that could be used to support euro zonemembers experiencing financial difficulty.

"The Commission is ready to propose a European framework forcoordinated assistance, which would require the support of euroarea member states," he said.

"In parallel, the Commission is preparing a communication onreinforced economic policy coordination and countrysurveillance." (Writing by Luke Baker, editing by Dale Hudson)

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