Greek parties mull harsh new cuts

By Nicholas Paphitis and Derek Gatopoulos

Associated Press

Published: Wednesday, Feb. 8 2012 11:27 p.m. MST

Pedestrians looks on a man who holds a benner reading "I have a brain tumour - I'm jobless and homless" in the entrance of the metro station at Athens' main Syntagma square, on Wednesday, Feb. 8, 2012. Leaders of the three parties backing Prime Minister Lucas Papademos' interim government were poring over a draft new austerity program demanded by Greece's creditors to continue providing rescue loans to the debt-crippled country. (AP Photo/Dimitri Messinis)

Associated Press

ATHENS, Greece — After three days of delays, Greek coalition leaders were locked in crucial debt talks Wednesday with the prime minister to review a draft deal on steep cutbacks demanded by creditors in return for a $170 billion bailout.

A meeting of eurozone finance ministers will go ahead in Brussels on Thursday evening to discuss the second massive bailout for Greece — a key indication that a deal is close. Jean-Claude Juncker, who heads the finance minister meetings and is Luxembourg's premier, said the officials will meet at 10 a.m. MST.

In Athens, leaders of three parties backing the 3-month-old coalition are under intense pressure to accept the new austerity demands and shield the country from a looming bankruptcy. However, as the talks with Prime Minister Lucas Papademos entered their seventh straight hour, there was still no sign that the politicians had reached a consensus on where the cuts should fall.

The leaders met at the prime minister's office after their parties were handed a 50-page, English-language draft agreement, drawn up with international debt inspectors late Tuesday.

Athens has already accepted a demand to fire up to 15,000 workers in the public sector in 2012, but is under pressure to impose deeper cuts, including reductions in pension payments and the minimum wage. Two years of cutbacks already have seen unemployment rise to around 19 percent and poverty to 20 percent in Greece, according to data from the EU statistics agency Eurostat.

Papademos called Juncker on Wednesday to relay the reservations of Greek political parties regarding proposed pension cuts, a party official said on condition of anonymity because the talks are ongoing.

Greece's largest labor union, GSEE, said it would meet Thursday to consider calling for new protests against the austerity measures. "They simply don't care that they are causing such damage to the country and such damage to society," said senior GSEE official Stathis Anestis.

A disorderly bankruptcy by Greece would likely lead to its exit from the eurozone, a situation that European officials have insisted is impossible because it would hurt other weak countries like Portugal, Ireland and Italy.

It was still not clear whether the parties — the majority Socialists, main rival conservatives, and small right-wing LAOS — would accept the austerity demands, particularly ahead of national elections provisionally set for late April.

"Austerity measures are like shoes that are too tight. Sooner or later, you want to kick them off," LAOS leader George Karatzaferis was quoted as saying by state TV.

The coalition talks have been repeatedly postponed this week to make time for exhaustive negotiations with representatives of the European Union, the European Central Bank and the International Monetary Fund, on whose approval the continued flow of Greece's vital rescue loans depends.

Without the bailout, Greece would not have enough money to pay off a big bond redemption payment due on March. 20, triggering a default that risks sending shockwaves throughout financial markets and the global economy.

As anger mounts in Greece at the prospect of further economic pain, patience is running out abroad.

German Chancellor Angela Merkel's spokesman said Greece must swiftly return to a sustainable, viable path.

"This is not a question one can take a lot of time to tackle," Steffen Seibert said. "It is important that the negotiations now come to an end."

Late Tuesday, Greece's private creditors signaled progress on a separate, linked agreement that would cut the country's privately held debt load by 50 percent, or some $131 billion.

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