Greek debt crisis talks to continue

Crisis talks on a debt deal for Greece will continue today after a five-hour meeting between the prime minister and coalition government party leaders failed to reach agreement.

Greece is racing to finalise austerity reforms needed for a new €130bn bailout, without which it will face bankruptcy in late March.

But in a country deep in recession, with unemployment at 19%, many politicians and unions oppose more painful measures.

The three party leaders had held a five-hour meeting last night with prime minister Lucas Papademos in a bid to hammer out a deal with debt inspectors representing eurozone countries and the International Monetary Fund.

Mr Papademos’ office said the three had agreed on measures to cut spending in 2012 by 1.5% of gross domestic product – about €3.3bn, improve competitiveness by cutting wages and non-wage costs such as social security contributions, reduce auxiliary pensions and recapitalise banks without nationalising them.

But the party leaders – socialist George Papandreou, Antonis Samaras of conservative New Democracy and Giorgos Karatzaferis of the right-wing Popular Orthodox Rally – differed on what this would mean in detailed proposals. All three have called meetings of their party executives to consider the proposals.

Mr Samaras said on leaving the talks that Greece’s creditors “are asking for more recession which the country cannot bear. I am fighting, with all my means, to prevent this”.

And Mr Karatzaferis said: “I will not contribute to the break-out of a revolution by the new poor that will consume the whole of Europe.”

Mr Papandreou objects to cutting actual wages and wants the state to take over banks, at least temporarily.

“Political party leaders are obliged to provide a first response to the proposals” by this morning, socialist party spokesman Panos Beglitis said after the party leaders’ meeting.

Mr Papademos later resumed talks with representatives of the “troika” of Greece’s creditors – the European Union, the European Central Bank and the International Monetary Fund.

Unions and employers’ associations have warned that private-sector wage cuts would deepen the nation’s recession, now in its fourth year.

Mr Papademos and Mr Venizelos also met separately representatives of banks in an effort to complete a bond swap deal that would reduce Greece’s debt by €100bn.

The talks involved Charles Dallara, managing director of Washington-based Institute of International Finance (IIF), and Jean Lemierre, senior adviser to the chairman of French bank BNP Paribas.

Josef Ackermann, chief executive of Germany’s Deutsche Bank and the IIF’s board chairman, is also in Athens.

About 60 people gathered outside parliament yesterday to protest what they view as the political leaders’ readiness to make concessions to the creditors. When they tried to block traffic, they were pushed back by police using tear gas.

Communist-affiliated unionists are holding a protest rally and march today.