Time runs out for Greece

Greek Prime Minister, Lucas Papadimos, had the difficult task to convince the party leaders of his coalition partners to sign the austerity agreement required by the International Monetary Fund (IMF), the European Commission (EC) and the European Central Bank (ECB). The deadline for Athens expires today. Although the meeting began in the afternoon with a three-hour delay, no specific results from it were announced by the writing of this article. The delay was due to the difficult negotiations with the trio (IMF, EC, ECB) at the last moment. The international lenders are not willing to compromise with the Greek Government on the issues of the 13^th and 14^th salary in the private sector, the minimum wage and the reduction of costs in the public sector. The trio insists on a reduction of the expenses for armaments by €400 mln over the next two years, of healthcare costs - by €1.1 bn, merger of state-owned enterprises and lay-offs, specified GRReporter.

These austerity measures, however, appear too severe to the leaders of parties supporting the Cabinet of PM Papadimos. Syndicates also flatly refuse to negotiate wage cuts. The agreement should be signed by former premier and leader of the centre-left PASOK party, Georgios Papandreou, the leader of the centre-right New Democracy party, Antonis Samaras, and the leader of a small nationalistic party, Georgios Karadzeferis.

Papandreou, whose government signed the first €110 bn bailout deal and paved the way for the second rescue package, insisted that any financial assistance to Greek banks should be accompanied by nationalisation. Greek banks will need about €15 bn for recapitalisation, which will come from the new bailout package following a voluntarily reduction of the Greek debt. The leader of New Democracy Antonis Samaras flatly opposed the reduction of salaries in the public sector wages and of pension benefits.

Meanwhile, pressure on the part of Europe has intensified. In an interview for the German magazine Der Spiegel, quoted by Reuters, Eurogroup Chief Jean-Claude Juncker stated that Greece would no longer be able to rely on the solidarity of other Eurozone countries if it fails to implement the agreed reforms and would have to declare bankruptcy in March.