EU increases pressure on Greece to accept bailout terms

Feb 6, 2012, 18:49 GMT

Athens/Brussels - Greece's coalition government on Monday yielded to pressure from the European Union to proceed with the lay-off of 15,000 public sector workers in 2012 as part of extra austerity measures demanded by the country's international creditors.

Public Sector Reform Minister Dimitris Reppas made the announcement as talks for a second 130-billion euro (171 billion dollar) rescue bailout were underway between the Greek government and negotiators from the European Union, the International Monetary Fund (IMF) and European Central Bank, known as the troika.

Greece had promised the gradual layoffs of 150,000 public sector workers by the end of 2015.

Earlier on Monday, Brussels indicated its frustration with Athens after weeks of forecasts from Greek politicians that a deal was close to being finalized.

'The truth is that we are already past the deadline' to get a new bailout package agreed, Amadeu Altafaj, spokesman for EU Economy Commissioner Olli Rehn, said in Brussels. 'Greece is a country which has lived for very long beyond its means. The normal consequence of such a situation would have been bankruptcy.'

French President Nicolas Sarkozy called on Greece to 'scrupulously respect' its commitments to international lenders, warning that no time was left.

'The Greeks have made commitments, they must scrupulously respect them. There's no choice, time is running out. It's a matter of days, we have to reach a conclusion now,' Sarkozy said after a meeting in Paris with German Chancellor Angela Merkel.

But a meeting of the leaders of the three parties backing Greek premier Lucas Papademos' coalition, initially scheduled for Monday, has been postponed for Tuesday.

All three parties have publicly opposed steep cuts in private sector pay demanded by the EU and IMF.

Meanwhile, the country's two largest private and public trade unions have called a nationwide strike for Tuesday against the new austerity measures, which also include a reduction in the minimum wage, currently at 750 euros.

The head of the National Confederation of Greek Commerce (ESEE) attacked the government for allegedly giving in to pressure from the country's foreign creditors for further wage cuts and labour reforms.

'The red lines in the negotiations turned into red ribbons,' ESEE president Vassilis Korkidis said in a statement.

Athens requires a new 130-billion-euro (171 billion dollar) bailout to avoid bankruptcy next month, when it faces a bond repayment of 14.5 billion euros.

Sarkozy proposed on Monday the creation of a special bank account to ensure that the bailout funds are used to reducing Greece's debt.

'We propose that the interest on Greek debt be deposited in a blocked account, which guarantees that the debts of our Greek friends will be paid,' Sarkozy said.