EU ramps up pressure on Greece as timetable slips

(ATHENS) - Embattled Greek Prime Minister Lucas Papademos faced growing EU pressure Monday to quickly agree tough austerity measures in a new bailout but talks with his coalition partners on the deal were delayed.

As unions called a general strike on Tuesday, the stakes mounted after Germany and France demanded progress.

However a key meeting due to have been held Monday with heads of the Greek socialist, conservative and far-right parties which form Papademos' unwieldy coalition government was put back.

Around 5,000 people took part in evening protests called by the unions and left-wing parties against the austerity measures as Athens was hit by a torrential thunderstorm and strong winds.

"It is a pretence that the measures are taken to forestall bankruptcy," Communist party leader Aleka Papariga told the gathering.

"On the contrary, they will lead the people to misery to benefit the plutocracy and capital," she said.

The coalition talks, needed to secure approval of stinging austerity measures, "will very probably be held on Tuesday," a government source told AFP, adding: "The negotiations continue, there are still questions to address."

Papademos was to again due to meet officials from the EU, European Central Bank (ECB) and International Monetary Fund (IMF) on Monday evening.

The talks are aimed at wrapping up weeks of negotiations and save his country from a historic default in March that could roil the 17-nation eurozone and undercut a global economic recovery.

A new eurozone package worth 130 billion euros ($170 billion) in aid to Greece, pending since October, hangs in the balance.

In Paris, German Chancellor Angela Merkel and French President Nicolas Sarkozy ramped up pressure on Athens, as did the spokesman for a European commissioner in Brussels.

Merkel warned that Greece would receive no more EU aid to cope with the debt crisis until Athens reached a deal with the EU, ECB and IMF 'troika' on more spending cuts and reforms.

The two leaders also floated the idea of placing part of Greece's future bailout loan funds in a special account to make sure it is channelled to service the country's enormous debt, currently exceeding 350 billion euros, and not for other uses.

"The Greeks gave us undertakings," Sarkozy added. "They should respect them scrupulously. There's no choice."

A spokesman for EU commissioner Olli Rehn warned that Greece had already in effect missed the deadline to get the deal done by the coalition to reshape the economy and slash its debt in exchange for another bailout.

"The truth is that we are already past the deadline," spokesman Amadeu Altafaj said. "The ball is in the Greeks' court."

But an EU diplomatic source suggested all was not lost.

"We haven't lost all hope, we hope that between now and Wednesday evening, the negotiations will be wrapped up," the source told AFP, referring to public financing as the massive write-down of privately-held debt appeared all-but settled.

Grouped within the Institute of International Finance (IIF), negotiators representing banks, insurance companies and private institutional investors held talks on Sunday on cutting some 100 billion euros from the roughly 200 billion in Greek government debt they hold.

The EU source said that eurozone finance ministers have been asked to be on standby again for talks, probably via teleconference late "Wednesday or Thursday."

Meanwhile, the country's two main unions called a 24-hour general strike for Tuesday to protest the new measures.

The measures are a death sentence for the country, aimed at slashing salaries by 20-30 percent on top of previously imposed cuts, said Yiannis Panagopoulos, leader of the GSEE private-sector union.

Papademos on Sunday managed to get limited agreement with his coalition partners on a state savings target of 1.5 percent of gross domestic product (GDP) that would include the implementation of reforms to lower production costs and a scheme to recapitalise Greek banks.

And Administrative Reform Minister Dimitris Reppas confirmed that 15,000 civil service jobs would be axed this year as requested by EU-IMF creditors.

Greece must pay 14.5 billion euros in bonds due March 20 to avoid default.

Athens and its private creditors are under intense pressure from the 'troika' to cut the country's total debt burden down to what is seen as a sustainable level of 120 percent of GDP in 2020 from 160 percent at present.