Greek leaders in emergency meeting for debt deal
(ATHENS) - Greek Prime Minister Lucas Papademos held an emergency meeting with political allies on Sunday after hours of "superhuman" negotiations with EU-IMF bailout auditors failed to produce a rescue deal.
George Papandreou, Antonis Samaras and George Karatzaferis -- the leaders of the socialist, conservative and far-right parties backing the government -- still have objections to new austerity measures demanded by Greece's creditors.
Athens has been in talks with the European Union, the International Monetary Fund and the European Central Bank -- known as the 'troika' here -- on further action needed to unlock a new eurozone rescue deal worth 130 billion euros ($171 billion) pending since October.
Pressure is also high for an agreement with private lenders to wipe out part of the 350-billion-euro Greek debt, as Athens faces loan repayments of 14.4 billion euros ($19 billion) on March 20.
"I come with the hope that I will not have to repeat what former German chancellor (Helmut) Schmidt recently said," Karatzaferis told reporters, hours after warning that he would not bow to pressure from Berlin and "blackmail conditions".
Schmidt in December had warned that Germany needed to tread carefully in handling the eurozone crisis and avoid alienating its fellow EU partners.
An accord has to emerge Sunday for Greece to avert a disorderly default in March, Finance Minister Evangelos Venizelos warned ahead of the leaders' meeting.
The head of Deutsche Bank Josef Ackermann, chairman of the Institute of International Finance (IIF) which is conducting the negotiations with Greece on behalf of banks, is in Athens and could join the debt talks if an agreement is reached on additional austerity reforms, a government source said.
But the omens are not good.
The party leaders oppose a demand by public creditors for labour cost cuts, arguing that further reductions will exacerbate a recession already fueled by two years of austerity measures.
Wage costs to Greek businesses fell by 9.2 billion euros or 25 percent from 2009, Labour Minister George Koutroumanis told parliament last week.
The fall caused a 4.2-billion-euro drop in contributions to the country's main social insurance fund IKA, he said.
George Karatzaferis, whose far-right party LAOS is one of the coalition's three partners, on Saturday threatened to reject the eurozone bailout deal.
"I do not function well under conditions of blackmail," Karatzaferis told a party gathering in the northern city of Thessaloniki.
"If the package is not to our liking, we will not accept it," he said.
Papademos has reportedly threatened to resign if his coalition backers reject the demanded austerity measures, but government spokesman Pantelis Kapsis refused to confirm this.
Equally contentious are proposed additional civil service cuts, now reportedly affecting teachers and military staff, and a reduction in the minimum monthly wage which now stands at 750 euros.
A senior government official on Sunday said "superhuman" negotiations with auditors from the troika had made progress but that certain gaps remained.
Eurogroup chief Jean-Claude Juncker piled further pressure on Athens, threatening to cut off funds if reforms were seen to stall.
"If we were to see that everything was failing in Greece then there wouldn't be a new (refinance) programme," Juncker told German magazine Spiegel.
"Everything must be concluded by (Sunday) night... so that we can be within the timetable given the bond maturities in March," Venizelos said.
"We are on a knife edge," the minister warned.
A further round of negotiations with the public lenders was held earlier on Sunday, Papademos' office said.
French Economy Minister Francois Baroin on Sunday said talks were "difficult" but progress had been made on the privately-held debt swap.
"In any case, the rendez-vous is on February 13 at the latest," Baroin said, referring to the tentative deadline for a deal.
Europe's commissioner for maritime affairs Maria Damanaki, who is Greek, said the country has been on a "disastrous path".
"For two years we have promised changes which we failed to pursue, or failed to complete," she told To Vima weekly.
"We say much and do little. We agree to timetables we do not keep. Hence we have created the image of a state that is systematically unreliable," Damanaki said.
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