Leading German politicians warned Greece on Tuesday that the country would not receive a cent more aid unless it fulfills all the conditions of its international bailout.
An election on Sunday in Greece failed to deliver a parliamentary majority for the two big pro-bailout parties, plunging the country into political limbo and increasing the risk that another vote may be required to resolve the impasse.
On Tuesday, the leader of the Left Coalition party, which benefited from rising anger over austerity to take second place in Sunday's poll, declared Greece's policy pledges under its EU/IMF rescue null and void.
As Europe's largest economy, Germany has contributed the biggest share of the financial guarantees under Greece's bailout, which is paid out in installments on the condition that Athens meets specific savings goals.
"The agreements must be respected. I don't think we can or should renegotiate," said Martin Schulz, a German politician and president of the European Parliament, on a visit to Berlin.
Gerda Hasselfeldt, a senior member of the Bavarian Christian Social Union (CSU), sister party to Chancellor Angela Merkel's Christian Democratic Union (CDU), echoed Schulz in warning Greece against any backsliding.
"Our position is unchanged. Aid can only flow if the conditions are met," Hasselfeldt told reporters.
Greece must push a new round of spending cuts through parliament next month to qualify for an 11.5 billion euros aid installment that it needs to avoid bankruptcy. The post-election deadlock has raised questions about whether that timeline can be met.
The vote in Greece and the victory of Socialist Francois Hollande in a French presidential election at the weekend underscored a growing backlash in Europe against austerity measures favoured by Berlin as the way out of the single currency bloc's debt crisis.
"PRECARIOUS" FRANCE
France is struggling with weak economic growth, a gaping trade deficit, 10 percent unemployment and strained public finances that prompted ratings agency Standard & Poor's to cut its triple-A credit rating in January.
Despite this backdrop, Hollande promised during his campaign to raise the minimum wage, hire tens of thousands of new teachers and dilute the increase in France's retirement age that outgoing President Nicolas Sarkozy pushed through against strong opposition from unions and the French left.
Hollande has promised to push back against German austerity policies, but many expect him to water down his plans after an audit of state finances that could be completed next month.
Peter Altmaier, a leading conservative ally of Merkel, said on Tuesday that a new French government would have very little room to manoeuvre on fiscal policy.
"The French economy and the country's finances remain in a precarious position," Altmaier, parliamentary whip for Merkel's CDU, told reporters. "Any country that attempts through higher deficits … to run a supply-driven policy will run foul of the markets very quickly and see its interest rates rise," he added. "There simply isn't any wiggle room."
Altmaier said he was hopeful that, once French parliamentary elections are over in June, Berlin could reach a policy consensus with Paris that reaffirmed the path of budget consolidation in Europe "once and for all".
Merkel, who publicly supported conservative incumbent Sarkozy in the French race, telephoned Hollande on Sunday after his victory and invited him to Berlin for talks.
The two leaders are due to meet next week, after Hollande is sworn in as president, to try to iron out their differences.
