LAST-DITCH talks to secure a second EU-IMF bailout for Greece will continue today after the country’s government came close to a deal early this morning to back a swingeing new austerity plan.
A meeting in Athens between technocrat prime minister Lucas Papademos and the three leaders of the parties backing his coalition ended without complete agreement.
A statement from Mr Papademos’s office after seven hours of talks said one question remained outstanding. The issue was not specified but the disagreement centres on pension cuts which were strongly opposed by the leader of the centre-right New Democracy party, Antonis Samaras.
In addition, it later emerged that Yiorgos Karatzaferis, leader of the far-right Laos party in the government, had expressed “serious reservations” about the plan.
Mr Papademos went straight from the negotiations with the three leaders to a new round of talks with officials from the EU-IMF troika, who have insisted that all government parties back the plan in full.
The prime minister’s aim was to achieve agreement on the entire package before an emergency meeting of euro zone finance minister this evening in Brussels. International Monetary Fund chief Christine Lagarde will also attend this meeting.
Mr Jüncker gave the go-ahead for the ministers’ talks before any public indication that the Greek government would endorse the troika’s plan.
These talks come as Greek bondholders gather in Paris to discuss a debt restructuring plan for the country and the governing council of the European Central Bank holds a scheduled meeting this morning in Frankfurt.
Although it remains unclear whether Mr Samaras will back the plan, these meetings have been called to finalise a bailout plan which has been dogged for months by brinkmanship and a deterioration of the Greek economy. The Greek government’s talks had been deadlocked for more than a week, prompting questions as to whether Mr Papademos would be able to secure support for the plan.
The prime minister is reported to have phoned Mr Jüncker after four hours of talks last night to tell him Mr Samaras was objecting to cuts to supplementary pensions, an issue said to have dominated the talks.
Other leaders sought different concessions, but analysts believe none were granted.
The talks come against the backdrop of deepening frustration in Europe at the failure of Greek leaders to implement measures promised under the country’s first EU-IMF bailout two years ago.
The meetings today in Brussels, Frankfurt and Paris will have crucial bearing on the €130 billion rescue plan, which must be signed off within days to ensure Greece averts a crippling debt default next month.
The initiative includes a complex debt restructuring process designed to cut €100 billion from the privately-held portion the Greek national debt.
With several deadlines missed already, the EU authorities still hope to initiate a voluntary bond-swap next Monday with a view to finalising the arrangement before a €14.5 billion debt falls due next month.
Still in the balance is whether the ECB opts to forego profits on the Greek bonds it holds as part of the effort to bring the country’s debt to a sustainable level by 2020.
The condition for such aid is that Greek leaders accept swingeing cutbacks which will erode living standards in the country.
The ministers are likely at their meeting to discuss a Franco-German plan which would see bailout aid lodged in an escrow account earmarked for the repayment of debt.
Such an initiative would enable Greece’s international sponsors to withhold aid for government spending if Athens reneged on its commitments while continuing to provide aid to service the country’s debt.