Eurozone to meet as Greek debt talks still unresolved

Feb 9, 2012, 13:06 GMT

Athens/Brussels - Eurozone finance ministers were preparing to meet on Thursday to discuss a second bailout package for Greece, despite Greek politicians' failure to reach full agreement on the terms of the assistance.

Negotiations in Athens stalled after party leaders in the coalition government refused to agree to international creditors' demands for 300 billion euros (398 billion dollars) in cuts to state and private pensions.

Overnight, the office of Prime Minister Lucas Papademos said that coalition members 'agreed on all points except one, which calls for further discussion and elaboration with international creditors.'

Socialist George Papandreou, Conservative Antonis Samaras and right-wing leader Giorgos Karatzaferis accepted other new austerity measures that include cuts in the minimum wage of up to 32 per cent, 15,000 layoffs and a pay freeze in the public sector until unemployment falls to 10 per cent.

The latest figures, released Thursday, indicated that the jobless rate had shot up to a record 20 per cent in November.

'The country's survival over the coming years depends on a bailout,' said Finance Minister Evangelos Venizelos, before leaving for Brussels to attend the Eurogroup meeting with eurozone peers.

'It will determine whether the country remains in the eurozone or whether its place in Europe will be in danger,' he said. 'We must look at the national interest and the interest of our children.'

Greek officials said representatives from the European Union, International Monetary Fund (IMF) and European Central Bank (ECB), known as the troika, have given the government 15 days to provide another alternative to meet the 300-million-euro shortfall.

But in Brussels the European Commission refused to confirm this.

'Nobody seems to be aware of such an extension,' Amadeu Altafaj, spokesman for EU Economy Commissioner Olli Rehn, told reporters.

EU officials had earlier said this week that the Eurogroup would not meet until Greek politicians had met all the conditions for a bailout - which include securing a deal with private lenders on a 100-billion-euro debt writedown.

But on Wednesday Eurogroup President and Luxembourg Prime Minister Jean-Claude Juncker refused to wait any longer, and convened a meeting anyway - showing the EU's impatience to put an end to the Greek saga.

'Uncertainty would have increased if time passed without there being political level discussions,' Altafaj said in Brussels, defending Juncker's move.

Athens was granted a 110-billion-euro bailout bailout from the EU and the IMF in 2010, which was meant to cover its needs until 2013.

But it has ran out of money ahead of time, while it has been unable to deliver on promised reforms and deficit reduction targets. It now needs a second rescue package by March, in order to meet a 14.5-billion-euro bond repayment.

In October the EU and the IMF calculated that Athens would require no more than 130 billion euros, but the figure is thought to have increased due to the country's worsened economic outlook.

A Wall Street Journal report Wednesday suggested that the ECB might be ready to help plug the funding gap by foregoing profits on the Greek bonds it bought last year. The concession would be worth 11 billion euros, the newspaper said.

Meanwhile, Greece's two largest private and public sector unions reacted to the overnight announcement that more austerity measures were on the way by announcing that they would hold a 48-hour-strike starting on Friday.