BERLIN (Bloomberg) - German Chancellor Angela Merkel signaled a demand for greater budget discipline was the price for her supporting European Union aid to Greece, denouncing what she called "superficial" solidarity and seeking to quell speculation of a split with her finance minister on the issue.

Merkel said she's made no decision on whether to back EU aid or to seek International Monetary Fund assistance to help Greece contain Europe's biggest budget deficit. In an interview with Deutschlandfunk, Merkel reiterated that Greece hasn't requested financial aid and said the debate on what form any assistance would take centered on "technical questions".

"I remain very explicitly open" to either option should the circumstance arise, Merkel said in the radio interview.

Her comments underscored the struggle within Merkel's government - and among European leaders - on how to react to the Greek budget crisis. Public opposition to a bailout for Greece has escalated in Germany, the main contributor to the EU budget, before an EU summit in Brussels March 25 to 26.

European Commission President Jose Barroso said two days ago that the commission was ready to propose a financial-aid mechanism for Greece that would consist of coordinated bilateral loans from euro-area countries.

"I do not want to speculate if there will be a financial contribution from the IMF," Mr. Barroso said in a statement. "What is important is to agree on a euro-area instrument. I urge the EU's leaders to agree on this instrument as soon as possible."

Finance Minister Wolfgang Schaeuble told newspaper Bild am Sonntag that such aid would take place "in the most extreme circumstance" and said Greece also had access to IMF funding.

The German government sought to play down divisions between Merkel and Schaeuble, denying a report in Der Spiegel magazine that the finance chief had told his staff not to communicate with chancellery aides without his consent.

"An intensive exchange occurs daily between the chancellor and the finance minister along with their ministries on Greece," the government said in a statement yesterday.

Merkel's government said March 19 it wouldn't rule out a loan to Greece from the IMF. Schaeuble's spokesman expressed "great reservation" about aid from the Washington-based lender.

In an appearance before members of her Christian Democratic Union yesterday, Merkel lauded Greek Prime Minister George Papandreou's efforts to cut his budget deficit to 8.7 percent of gross domestic product from 12.7 percent, calling his austerity measures "a real achievement".

"There has to be solidarity that tackles the problem at its roots, not solidarity that's superficial and in the end weakens everybody," Merkel said at a political rally in the city of Muenster in the western state of North Rhine-Westphalia.

Merkel warned in the Deutschlandfunk interview against roiling markets by raising "false expectations" on Greek aid at the EU summit. She said Greece wasn't in danger of insolvency and that the issue wasn't on the agenda of this week's summit.

"At the moment I don't see, and the Greek government just confirmed this, that Greece needs money," Merkel told Deutschlandfunk.

European Union Economic and Monetary Affairs Commissioner Olli Rehn told newspaper Welt am Sonntag additional sanctions shouldn't be the priority and that the EU Commission should have better access to member state's budget planning in the future.

"The primary goal of the EU right now shouldn't be intensifying sanctioning instruments for deficit violators," Mr. Rehn said in the interview. "Rather, prevention in the framework of the stability agreement must be improved."