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Greeks agree on more austerity cuts to release US$173b bailout
Source: Agencies |
February 10, 2012, Friday
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GREECE has reached a tentative agreement on new austerity cuts demanded by creditors to release a 130 billion euro (US$173 billion) bailout, hours before a meeting of finance ministers in Brussels, Prime Minister Lucas Papademos' office said yesterday.
A spokeswoman said the agreement with the majority Socialists and the conservatives will allow alternative cuts to those rejected early yesterday during a marathon meeting of the three coalition party leaders. No details were available on what alternative measures would be chosen.
Greek Finance Minister Evangelos Venizelos issued a dramatic plea to the coalition leaders early yesterday to swiftly resolve their differences.
"It will determine whether the country remains in the eurozone or whether its place in Europe will be endangered," said Venizelos "There is no room for any other expediency: we must look Greeks in the eye, look at the national interest and the interest of our children."
Mario Draghi, the president of the European Central Bank, confirmed the latest stage in the austerity talks, telling reporters in Frankfurt, Germany that the Greek party leaders had accepted the terms of the deal. The ECB is involved in the debt talks along with the European Union and the International Monetary Fund - known as the "troika".
Although other cuts demanded by the troika were approved, party leaders had, however, balked at new pension cuts, leaving the bailout in limbo and the threat of bankruptcy high.
The deal came just ahead of talks in Brussels between finance ministers from the 17 euro countries.
"It is up to the eurogroup to decide at the highest level if the conditions are in place to proceed with the second (bailout) program," said Amadeu Altafaj Tardio, a spokesman for the European Commission, one of the three institutions charged with negotiating rescue conditions.
Also attending the Brussels meeting will be Christine Lagarde, head of the International Monetary Fund, and Draghi.
Greece needs the bailout by March 20 so it will have enough money to redeem 14.5 billion euros worth of bonds coming due.
Financial meltdown
If it doesn't make that payment, it will be in default. Financial analysts fear that could set off a chain reaction similar to the financial meltdown triggered by the collapse of investment bank Lehman Brothers in 2008.
In addition to the budget cutting mandated by the troika, Greece is close to an agreement with private investors who hold nearly two-thirds of its debt to reduce borrowing costs.
Greece is in a deep recession. Unemployment is 19.2 percent after the economy's fifth straight year of decline. Its government finances and economy are being dragged down by costly political patronage, tax evasion and protection for some trades.
There is strong resistance to further austerity. Union leaders announced a 48-hour general strike for today and tomorrow.
A spokeswoman said the agreement with the majority Socialists and the conservatives will allow alternative cuts to those rejected early yesterday during a marathon meeting of the three coalition party leaders. No details were available on what alternative measures would be chosen.
Greek Finance Minister Evangelos Venizelos issued a dramatic plea to the coalition leaders early yesterday to swiftly resolve their differences.
"It will determine whether the country remains in the eurozone or whether its place in Europe will be endangered," said Venizelos "There is no room for any other expediency: we must look Greeks in the eye, look at the national interest and the interest of our children."
Mario Draghi, the president of the European Central Bank, confirmed the latest stage in the austerity talks, telling reporters in Frankfurt, Germany that the Greek party leaders had accepted the terms of the deal. The ECB is involved in the debt talks along with the European Union and the International Monetary Fund - known as the "troika".
Although other cuts demanded by the troika were approved, party leaders had, however, balked at new pension cuts, leaving the bailout in limbo and the threat of bankruptcy high.
The deal came just ahead of talks in Brussels between finance ministers from the 17 euro countries.
"It is up to the eurogroup to decide at the highest level if the conditions are in place to proceed with the second (bailout) program," said Amadeu Altafaj Tardio, a spokesman for the European Commission, one of the three institutions charged with negotiating rescue conditions.
Also attending the Brussels meeting will be Christine Lagarde, head of the International Monetary Fund, and Draghi.
Greece needs the bailout by March 20 so it will have enough money to redeem 14.5 billion euros worth of bonds coming due.
Financial meltdown
If it doesn't make that payment, it will be in default. Financial analysts fear that could set off a chain reaction similar to the financial meltdown triggered by the collapse of investment bank Lehman Brothers in 2008.
In addition to the budget cutting mandated by the troika, Greece is close to an agreement with private investors who hold nearly two-thirds of its debt to reduce borrowing costs.
Greece is in a deep recession. Unemployment is 19.2 percent after the economy's fifth straight year of decline. Its government finances and economy are being dragged down by costly political patronage, tax evasion and protection for some trades.
There is strong resistance to further austerity. Union leaders announced a 48-hour general strike for today and tomorrow.
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