Eurozone stalls Greek cash aid despite austerity deal

(BRUSSELS) - Sceptical eurozone finance ministers refused Thursday to release a second bailout for Greece, despite a last-minute deal in Athens on austerity measures demanded by creditors.

After rival Greek parties agreed more deep cuts, triggering another general strike, Luxembourg Prime Minister Jean-Claude Juncker said the Eurogroup of finance ministers could wait until next week.

The Greek government had hoped to unlock a bailout package worth 130 billion euros ($171 billion) that would banish the spectre of a devastating default.

Greek Finance Minister Evangelos Venizelos urged his counterparts to endorse the debt rescue, saying the austerity measures they demanded were agreed and that the "basic parameters" of a debt writedown deal was struck with banks.

But German Finance Minister Wolfgang Schaeuble said "there will not be a result" at the meeting, adding that the aim was "to make clear to Greece and the partners in the negotiations what are the conditions for a second agreement."

Warning Greeks they still needed to convince eurozone partners of their commitment, EU Economic Affairs Commissioner Olli Rehn said the first step was for the new spending plans to pass parliament over the coming days.

Diplomats said written commitments from party leaders fighting an expected April election were also crucial.

Some of the eurozone partners, such as the Netherlands, stressed that they also have to get any package through their parliaments.

The scope of EU monitoring of Athens' commitments was also an issue during the discussions, in what would revive controversy over a German-led plan to place Greece in a sort of wardenship.

Four months after European Union leaders agreed to mount a second bailout, provided private sector creditors first agreed a massive write-down of their holdings, Juncker said there were simply too many "points to clear up."

"If it's not tonight, it will be done next week," Juncker said.

But diplomats said a crucial debt sustainability report was not ready, that the agreement with the banks did not meet conditions set by EU leaders in October and that trust in Greek promises had slumped to an all-time low.

"People -- more than the four or five usual suspects -- were seriously underwhelmed by the 'deal'," said one senior ministerial official.

Not a cent has been raised from a promised 50-billion-euro privatisation drive, he underlined.

IMF managing director Christine Lagarde also cautioned: "There is still more to do."

"After a long and tough period of negotiation, we finally have a staff level agreement with the troika for a new, strong and credible programme," Venizelos said, referring to the team of EU, IMF and European Central Bank auditors who negotiated with the Greek government.

"We now need the political endorsement of the Eurogroup for the final step," Venizelos added.

He maintained that the "basic parameters" had been agreed for a bond swap with private creditors, aimed at slashing 100 billion euros from Greece's 350-billion-euro ($465 billion) overall debts.

Conservative leader Antonis Samaras said the deal struck in Athens meant the Greek people had "avoided the worst."

But by early evening, some 8,000 protesters had gathered on the streets of Athens on the eve of a 48-hour strike over what unions called "barbaric" wage and pension cuts.

Greek press reports said the monthly minimum wage would fall by 22 percent, to some 586 euros before taxes, paid 14 times a year.

Caretaker Prime Minister Lucas Papademos is trying to re-float Greece so voters can look ahead with some certainty.

Greece's debts amount to 160 percent of its gross domestic product, but its international backers are demanding that this be brought down to a maximum of 120 percent in 2020.

Some governments have said they will not pay a cent more than what was agreed in October, hence the pressure on Greece to squeeze out more savings from its recession-battered coffers.

Only then would the EU and the IMF hand over a loan package including sweeteners for Greece's ravaged banks.

The bond exchange though will take several weeks to perform, raising concerns whether it can completed before Greece faces 14.5 billion euros in payments due on March 20.

One official suggested that the pressure of this repayments crunch would reduce if the banks write-down is completed first, leaving more time then to lean on Greece for German-driven reform demands.

The deal with the private creditors would likely see the face value of the 200 billion euros in bonds that they hold cut in half -- but their total losses may hit 70 percent given they will receive 30-year bonds at lower interest rates.

The negotiators for the private creditors, Charles Dallara and Jean Lemierre, were both in Brussels as well.