Greek premier says 'total' consensus on austerity drive

(ATHENS) - Greek Prime Minister Lucas Papademos said Sunday there was "total convergence" among political allies on new austerity measures needed for a second bailout and debt cuts to avert default.

"This will allow us to negotiate in the best conditions," Papademos said after talks with his Socialist predecessor George Papandreou, Antonis Samaras, head of the centre-right New Democracy party, and far-right leader George Karatzaferis.

He said negotiations with creditors "are not easy ... the partners want additional engagements and conditions," and stressed that if the talks failed, Athens "faced the spectre of default."

"We will together put up a hard fight to guarantee the country's place in Europe and the eurozone ... united we can succeed," he said on the eve of a European Union summit on the debt crisis to be held in Brussels.

Papademos sought agreement on the broad outlines of an accord with private creditors to erase 100 billion euros ($130 billion) of Greece's debt, and the new recovery plan put forward by the European Union and the International Monetary Fund.

The eurozone and the IMF are demanding this commitment, even asking for it in writing, for the second time since November, so that Greece will stay on the straight and narrow through early elections to be held in the spring.

Samaras, a longtime proponent of EU-IMF remedies, is tipped to win the polls.

Meanwhile German Economy Minister Philipp Roesler backed beefed-up EU monitoring of Greece in an interview to be published Monday, after Athens dismissed calls for it to give up control over its budget.

Roesler told the daily Bild that the European Union should step in to ensure that Greece toes the line of budget austerity.

"We need more leadership and monitoring in implementing the course of reform (in Greece)," he was quoted as saying.

"If the Greeks fail to do this themselves, the leadership and monitoring must come in a stronger way from outside, for example via the EU."

The idea that Greece might cede control over its budget to the EU was contained in a German submission to its eurozone partners revealed late Friday by the Financial Times and confirmed by European sources.

Under the radical plan, a commissioner appointed by finance ministers from the other 16 eurozone states would be able to veto budget decisions made by Athens.

On Sunday, Greek Finance Minister Evangelos Venizelos said: "Whoever hands people a dilemma between financial aid and national dignity is ignoring basic historical teaching."

In a statement released as he left for Brussels, Venizelos added: "Our partners know that European unification is founded on the institutional equality of member states and respect for national identity."

Greece is trying to wrap up a a so-called Private Sector Involvement deal with private creditors for them to accept a halving of the 200 billion euros in debt they hold, with talks previously snagged on the amount of interest to be paid on the remainder.

Venizelos told reporters on Saturday that he was hopeful of a deal within days.

An international troika made up of the European Commission, the European Central Bank and the International Monetary Fund is trying to make Greece's debt mountain sustainable by 2020.

They demand the austerity measures and deregulation before they will agree to release the second bailout, initially agreed in October, for 130 billion euros.

Among proposed measures are revising wages to boost competitiveness at a time when the economy is facing its worst recession in decades.

Papademos has warned that labour cuts are among other measures that will determine Greece's economic survival.

The troika is also asking for new cuts in social benefits and higher property taxes.

Athens faces a critical bond reimbursement worth 14.5 billion euros on March 20.