BRUSSELS — Greece has made progress convincing the rest of the eurozone that it should get a $170 billion bailout — but the country's austerity efforts will need much tighter surveillance, the chairman of the eurozone's finance ministers said Wednesday.
During a 3½ hour conference call between the finance chiefs of the 17 countries that use the euro, the ministers received assurances from Greece that it had found a further $424.5 million in cuts on top of austerity measures already agreed.
They also welcomed written commitments from the leaders of the two Greek parties that make up the coalition government to implement promised cuts and reforms even after elections expected in April.
However, in a sign of the deep distrust that has built up — especially among rich euro nations like Germany, the Netherlands and Finland — Jean-Claude Juncker, the prime minister of Luxembourg who also chairs the finance ministers' meetings, said better surveillance mechanisms had to be set up before new aid could be released.
"Further considerations are necessary regarding the specific mechanisms to strengthen the surveillance of program implementation and to ensure that priority is given to debt servicing," Juncker said.
The statement appeared to be a reference to a Franco-German proposal to set up an account, separate from Greece's general budget, that would be dedicated to paying off Greece's massive debt. It was unclear whether this account would only manage the bailout money or whether government revenue could also be funneled into it.
Such an account would give the eurozone more control over what Greece does with its money, after the country has repeatedly missed budget, reform and privatization targets over the past two years. However, it would also constitute an unprecedented interference into the fiscal affairs of a sovereign state in Europe.
The European Commission, which is in charge of economic surveillance in the European Union, is now working on a specific proposal for such an escrow account, which will be present to the ministers at a meeting on Monday.
A German government official described the conference call as "intense and at times very technical." He said the participants received information on some of the debated topics only minutes before the call started, "which because of the short notice couldn't be verified and evaluated in detail."
The official said no minister challenged the idea that surveillance had to be strengthened and that paying off Greece's debts should have priority. He was speaking on condition of anonymity to discuss the confidential discussion between ministers.
The finance ministers held their conference call amid doubts in some countries over whether the $169.8 billion package of rescue loans, which comes on top of a $143.6 billion rescue granted in May 2010, can ultimately save recession-ridden Greece.
Yet, despite rumors that the bailout could be delayed until after the elections, Juncker said he expected the finance ministers "to be able to take all the necessary decisions" at their next meeting on Monday.
The second bailout is also tied to a $130.6 billion debt-relief deal with bondholders, under which the private creditors will swap the bonds they hold for ones with lower values and longer maturity dates.
Greece does not have much time to secure the bailout and implement the bond swap with investors because it risks defaulting on a $18.9 billion bond redemption in late March.
In Athens, Greek Finance Minister Evangelos Venizelos said all the issues concerning covering this year's austerity targets were clarified during Wednesday's conference call.
The written commitments from party leaders, the passage of a new austerity bill in Parliament over the weekend with a two-thirds majority and legislation regarding labor reforms were "a credible response to all those in Europe who doubt our ability to implement the program and to continue its implementation after the coming elections," Venizelos said.
dollar rises against euro on greece default worry
NEW YORK — The dollar rose against the euro Wednesday on fears that Greece won't be able to avoid a default.
Greek leaders approved cost-cutting measures on Sunday needed for the country to receive a $170 billion bailout package. But European finance ministers said the cuts are not enough and will not hand over the money until further cuts are made.
Without the money, Greece could default on its debt next month. A default would cause losses for European banks, disrupt financial markets and hurt other countries that use the euro.
"The refusal of euro area countries to unlock bailout funds is a sign that they have become more willing to let Greece default," Kathy Lien, director of currency research for the currency trading company GFT, wrote in a note to clients.
The euro fell to $1.3063 in late trading Wednesday from $1.3095 late Tuesday.
— Associated Press
ups experiences problems with tracking, processing
NEW YORK — UPS is reporting widespread, scattered technical problems affecting tracking and processing of packages.
United Parcel Service Inc. spokeswoman Susan Rosenberg said Wednesday that the outages are not affecting the movement of trucks or any other part of the operation. The problem is with some shipping applications that customers use to input and track shipments. Some are reporting problems getting into the system.
Rosenberg says a disruption like this is very rare because of the number of overlaps in the system designed to prevent them.
Atlanta-based UPS expects the disruption to be cleared up soon.
— Associated Press
gm to give bonuses in lieu of raises, freeze pensions
DETROIT — General Motors Co. plans to freeze its U.S. pension plan for longtime white-collar workers and give all salaried employees annual bonuses but not pay raises in an effort to hold down expenses, officials announced Wednesday.Comment on this story
The Detroit-based automaker said roughly 19,000 salaried workers hired before 2001 will move from a traditional pension with guaranteed payments to a 401(k)-type plan with contributions based on salary and bonuses. Employees hired after 2001, which represent about 30 percent of the company's salaried workforce, already are in that defined contribution plan.
The changes take effect Oct. 1, and workers will keep all pension benefits they have already accrued, officials said.
GM also said it would offer bonuses to all 26,000 salaried employees and release the amounts when it announces quarterly and full-year earnings today. The company is expected to post a 2011 net profit of about $8 billion — the best in its 103-year history.
— Associated Press