Talks on Greek bailout hang in the balance

By Demetris Nellas

Associated Press

Published: Sunday, Feb. 5 2012 11:30 a.m. MST

IMF chief debt inspector Poul Thomsen member of the so-called troika of Greece's creditors _ the European Union, the European Central Bank and the International Monetary Fund _ leaves the prime minister's official residence after meeting with Greece's Prime Minister Lucas Papademos in Athens, Greece on Sunday, Feb. 5, 2012. The troika demanded tougher austerity measures, private sector pay cuts and firings of civil servants. At stake is a new euro130 billion ($171 billion) bailout deal without which Greece will default before the end of March. (AP Photo.Kostas Tsironis)

The Associated Press

ATHENS, Greece — Politicians met with Prime Minister Lucas Papademos on Sunday to consider demands by Greece's creditors for tougher austerity measures, private-sector pay cuts and layoffs of civil servants.

At the same time, Finance Minister Evangelos Venizelos met separately with representatives of banks in an effort to complete a bond swap deal that would reduce Greece's debt by €100 billion ($131.6 billion).

Both efforts must be successful if deeply indebted Greece is to receive a new €130 billion ($171 billion) bailout from other countries in Europe and around the globe to prevent it defaulting before the end of March.

A failure of the negotiations would be a big setback in the eurozone economic crisis and probably unsettle financial markets worldwide.

Greece must get a passing grade on budget and structural reforms by inspectors from the so-called troika — the European Union, the European Central Bank and the International Monetary Fund — but in a country deep in recession, with unemployment at 19 percent, many politicians and unions oppose more austerity measures.

Papademos met Sunday with three top politicians who support his coalition government: former Prime Minister George Papandreou; Antonis Samaras, head of New Democracy, and Giorgos Karatzaferis, leader of Popular Orthodox Rally. All three appeared to remain opposed to more wage cuts in Greece.

Unions and employers' associations also have warned that private-sector wage cuts would deepen the nation's recession, now in its fourth year.

Members of the troika met with Papademos, Venizelos and Labor Minister Giorgos Koutroumanis on Sunday, but did not comment about what they had discussed.

Venizelos' talks with the banks about the proposed bond swap deal involved Charles Dallara, managing director of Washington-based Institute of International Finance, and Jean Lemierre, senior adviser to the chairman of French bank BNP Paribas.

Josef Ackermann, the CEO of Germany's Deutsche Bank and another member of the Institute of International Finance, also arrived in Athens on Sunday.

As an earlier round of talks between Papademos and the troika continued past midnight Saturday, a senior government official said the Greek government does not share the troika's views about how Greece's economy should be modified to make it more competitive.

____

Nicholas Paphitis contributed to this report.

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