Greek leaders' austerity meeting postponed again

By Nicholas Paphitis

Associated Press

Published: Tuesday, Feb. 7 2012 1:05 p.m. MST

Charles Dallara, managing director of the Institute of International Finance, a banking lobby, arrives at Maximou mansion to meet Greek Premier Lucas Papademos in Athens, Tuesday, Feb. 7, 2012. Pressure from home and abroad is intensifying on Greece's political leaders as they prepare to meet Tuesday to decide on harsh cutbacks to secure a euro130 billion ($170 billion) bailout and avoid a potentially disastrous default.

Thanassis Stavrakis, Associated Press

ATHENS, Greece — Greece's prime minister negotiated late into the night Tuesday with the country's international creditors, finalizing a proposal for new austerity measures to avoid a disastrous bankruptcy.

Prime Minister Lucas Papademos kept talking with senior debt inspectors from Greece's bailout creditors — other countries that use the euro and the International Monetary Fund — which meant his meeting with Greek party leaders was postponed until Wednesday.

The EU and the IMF insist that Greece must pass further harsh austerity measures — including private sector salary cuts and civil service firings — if it is to secure a second €130 billion ($170 billion) bailout to avoid defaulting next month and possibly leaving the eurozone.

A government official said a draft agreement on the austerity deal would be finalized during Papademos' meeting with the debt inspectors and forwarded to party leaders for scrutiny early Wednesday.

"It took much longer than expected," the official told the AP, speaking on condition of anonymity due to the sensitivity of the talks.

The impending cutbacks have angered Greek unions, who organized a nationwide strike Tuesday that stopped train and ferry services, closed schools and banks and put state hospitals on short staffing.

Riot police fired tear gas in Athens to repel hundreds of anti-austerity protesters who burned a German flag and tried to break a cordon outside Parliament as they chanted "Nazis out!"

The EU, the IMF and other eurozone nations have been ratcheting up the pressure on Greece, which can't repay a March 20 bond unless it gets new bailout funds.

On Monday, Papademos' government caved in to creditors' demands to cut civil service jobs, announcing that 15,000 positions would be cut this year out of 750,000. The decision breaks a major taboo, as Greek state jobs had been protected for more than a century to prevent political purges.

The European Union and IMF are also pressing Greece to cut the €750 ($979) monthly minimum wage to help boost the country's competitiveness. This reduction would also affect the private sector — because private companies base their salaries on the minimum wage — and would even unemployment benefits.

Greece's coalition party leaders held a first key meeting on the austerity measures then postponed the second round of talks on Monday so Papademos could complete negotiations with EU-IMF debt inspectors.

The leaders have already agreed to cut 2012 spending by 1.5 percent of gross domestic product — about €3.3 billion ($4.3 billion); to improve competitiveness by slashing wages and non-wage costs and to re-capitalize banks without nationalizing them. The details remain to be worked out.

Creditors are also demanding spending cuts in defense, health and social security.

Unions and employers' federations alike have deplored the measures as unfair and unnecessary. Some 10,000 people marched Tuesday against the austerity program. A separate demonstration by about 10,000 Communist unionists ended without incident.

"They are committing a crime against the country. They are driving wage-earners into poverty and wiping out pensioners and the unemployed," said Vangelis Moutafis, a senior member of Greece's largest union, the GSEE. "They are selling off state assets for nothing. This cannot continue. This crime must be stopped, right now."

The European Trade Union Confederation described the proposed new cutbacks as "simply not defensible."

"Greek workers and citizens have been pushed to the limit of what is acceptable in terms of restrictions," ETUC General Secretary Bernadette Segol said. "Labor law is being flouted and men and women are being crushed in the process."

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