Greece Bailout: Coalition Fails to Agree to Cuts.

Global EconomyGreek PM Lucas Papademos has failed to secure the support of his coalition for a raft of new austerity measures, after more than seven hours of talks.

Greek party leaders, from left,  George Karatzaferis, Antonis Samaras, Prime Minister Lucas Papademos and George Papandreou at the prime minister's office in Athens (8 Feb 2012)
The party leaders only received the text of the draft proposals on Wednesday morning

He met officials from three parties to try to secure a deal leading to a fresh bailout package.

The main stumbling block was proposed pension cuts, reports said.

Greek Finance Minister Evangelos Venizelos is due to travel to Brussels for a meeting with Eurozone finance ministers on Thursday afternoon.

Observers say there is huge pressure for Greek political leaders to strike a deal prior to that meeting.

Following the crunch talks in Athens, Mr Papademos was reported to have gone directly into a meeting with EU and IMF officials.

They represent the so-called “troika” of bailout creditors – the European Union, the European Central Bank and the International Monetary Fund – who had earlier agreed the draft proposals with the prime minister.

They are thought to include a 20% minimum wage reduction, pension cuts and the sacking of 15,000 public sector workers – and have prompted further mass protests.

Officials from Pasok, New Democracy and the far-right Laos party only received the 50-page text on Wednesday morning, reports said, after Mr Papademos agreed the deal with the troika on Tuesday night.

Greek deadlines

  • This week: Eurozone finance ministers to hold a meeting or conference call to approve the latest bailout, as soon as Greek politicians agree to conditions
  • 15 February: The latest a deal can be finalised in order to allow enough time for the Greek debt exchange, according to the Commission
  • 20 March: Greece must have received its next tranche of bailout cash to meet a 14bn euro debt payment
  • April: Greek elections expected

According to Laos leader George Karatzaferis, the bulk of Wednesday’s meeting was spent discussing the issue of supplementary pensions, which had reportedly been in line for a 15% cut.

Mr Papademos’s office said Mr Karatzaferis had expressed “serious reservations” during the meeting.

As he left, Mr Karatzaferis told reporters: “I made my positions clear from the beginning… I wanted to support Mr Samaras (New Democracy leader) on that issue (pensions).”

Antonis Samaras said he had felt obliged to bargain hard.

“We want to ease the people’s suffering,” he said.

However, the BBC’s Mark Lowen, in Athens, says the package of cuts and reforms would go down very badly with an austerity weary Greek nation.

According to unconfirmed reports in the Greek media, the measures were aimed at trimming 3.2bn euros (£2.7bn; $4.2bn):

  • Minimum wage to be cut by 22% from 751 euros per month to 600 euros.
  • Supplementary pensions to be reduced by 15% but basic pensions also likely to be cut
  • 15,000 public sector jobs to go by end of 2012
  • But holiday bonuses, known as 13th and 14th month salaries, expected to be saved

On Tuesday night, a spokesman for the International Institute of Finance (IIF) which is negotiating on behalf of the private creditors said the talks had been constructive and its three officials were returning to Paris for further consultations.

As part of Greece’s new 130bn euro ($170bn; £110bn) bailout deal – Greece’s second international bailout – Mr Papademos and Finance Minister Evangelos Venizelos have also been engaged in a separate strand of negotiations with private creditors over a write-off of up to 70% of the value of the money owed by the Greek government. Nah.


About Steve King

iPeopleFINANCE™ Chief Operating Officer. Former CEO of Endymion Systems, Inc. a $36m Information Systems Services company. Co-founder of the Cambridge Systems Group, the creator of ACF2, the leading IBM Mainframe Data Center Security product; acquired by Computer Associates. IBM, seeCommerce, marchFIRST, Connectandsell alumni. UC Berkeley alumni. View all posts by Steve King

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