Greece crisis talks over EU bailout resume

06.02.2012 15:21

BBC: Negotiations have resumed in Greece on new austerity measures, such as wage and job cuts, demanded by EU leaders.

Some progress has been made, the BBC understands, after talks broke down without an agreement last night.

The cuts are in exchange for a 130bn-euro (£108bn; $171bn) EU and IMF bailout and a 100bn write-off of private sector debt. Athens needs the money by March to avoid a default.

French president Nicolas Sarkozy said time was running out for a deal.

Speaking after a meeting with German Chancellor Angela Merkel, President Sarkozy urged Greek political leaders to agree to reforms, saying the crisis had to be solved "once and for all".

"Greece's leaders have made commitments and they must respect them scrupulously," he told a press conference.

"Europe is a place where everyone has their rights and duties. Time is running out, it needs to be concluded, it needs to be signed."

Athens faces loan repayments to private lenders of 14.4bn euros on 20 March which it currently cannot afford to pay.

Austerity measures
Talks on Sunday between Greek PM Lucas Papademos and the leaders of his three-party coalition over new austerity measures ended without full agreement.

The measures include:

Further government spending cuts equal to 1.5% of GDP
Re-capitalisation of Greek banks - whilst retaining their independence
Reducing labour costs, including a cut in the minimum wage and holiday bonuses
Further civil service job cuts
Cuts to the size of pension programmes

On Sunday, the prime minister's office said that some agreement had been reached in some areas. But there were disagreements over the size of job cuts, cuts to the minimum wage, pension cuts and the ending of a so-called 13th or 14th month's pay as a holiday bonus.

BBC Athens correspondent, Mark Lowen, says there are now signs that a deal could be struck later today.

The outlines of an agreement have been formed that would reduce the minimum wage, currently about 750 euros a month, by 20%, but keep the holiday bonuses that had been under threat, government sources suggest.

Other sticking points, such as pension payments, remain, but the parties are now expressing hope that a final deal may be struck in talks with the prime minister later in the day.

The IMF and EU would then need to consider if the reforms are sufficient to warrant the loan money, which would save this country once again from the abyss.


Unions and employers' groups have resisted pay cuts, with the two largest unions calling for a day-long strike for Tuesday.

Iannis Panagopoulos, leader of the GSEE private-sector union, was reported as saying proposed 20-30% cuts in private sector wages "chronicle a pending death".

Anti-austerity protests are also expected to take place on Monday evening.

The discussions come as the EU's statistics office reported Greece's debt spiked to 159.1% of gross domestic product in the third quarter of 2011 - up from 138.8% a year earlier and 154.7% in the second quarter.

Unless Greece promises to implement reforms, the eurozone ministers say Greece will not be able to go ahead with a plan to restructure its privately-held debt.

Eurozone finance ministers had hoped to meet on Monday to finalise the bailout - Greece's second - but that meeting has been delayed.

Greek leaders are under pressure to agree on new austerity measures before the meeting takes place later this week.

Greece has prepared a debt plan with private creditors to more than halve the value of Greek debt and in return receive new, 30-year bonds with an average interest rate of less than 4%.

The restructuring is designed to help cut Greek debt to 120% of GDP by 2020, a level viewed as sustainable by some economists.