With strong criticism against Europe's conservative governments, the head of the Socialists in the European Parliament Martin Schulz on Monday said that the Greek prime minister was being forced to adopt policy of fiscal austerity - as opposed to essential reforms - dictated to him by these conservative powers.

Schulz was speaking to reporters at the Hilton Hotel in Athens, where he will take part in a three-day meeting of the Progressive Alliance of Socialists and Democrats of the European Parliament that begins here on Monday and ends on Wednesday. Greek Prime Minister George Papandreou will address the meeting on Tuesday.

Noting that austerity hampered growth and did not solve problems, the German MEP stressed that Europe is not moving in the right direction and criticised the policies being followed, noting that 21 of the 27 European governments were conservative. He also accused big banks and financial institutions of creating the crisis that they were now benefiting from, underlining that they have an obligation to support EU cohesion policies.

He was particularly critical of the system that allowed banks to borrow from the European Central Bank at an interest of 1 percent and then demand that countries with problems pay interest rates as high as 10 percent. Stressing that ordinary people could not "withstand more cuts," he strongly supported Papandreou's call for a tax on financial transactions.