Greek talks fail to produce deal

Athens: Greek Prime Minister Lucas Papademos held an emergency meeting with political allies yesterday after hours of "superhuman" negotiations with EU-IMF bailout auditors failed to produce a rescue deal.

George Papandreou, Antonis Samaras and George Karatzaferis — the leaders of the socialist, conservative and far-right parties backing the government — will have to overcome objections to new austerity measures demanded by Greece's creditors.

"I come with the hope that I will not have to repeat what former German chancellor [Helmut] Schmidt recently said," Karatzaferis told reporters, hours after warning that he would not bow to pressure from Berlin and "blackmail conditions".

Schmidt in December had warned that Germany needed to tread carefully in handling the Eurozone crisis and avoid alienating its fellow EU partners.

An accord had to emerge yesterday for Greece to avert a disorderly default in March, Finance Minister Evangelos Venizelos warned ahead of the meeting.

And Eurogroup chief Jean-Claude Juncker piled further pressure on Athens, threatening to cut off funds if reforms were seen to stall.

‘Difficult'

"If we were to see that everything was failing in Greece then there wouldn't be a new [refinance] programme," Juncker told German magazine Spiegel.

Athens has been in talks with the European Union, the International Monetary Fund and the European Central Bank — known as the ‘troika' here — on further action needed to unlock a new Eurozone rescue deal worth €130 billion (Dh628 billion) pending since October. A further round of negotiations with the public lenders was held earlier yesterday, Papademos' office said.

Pressure was also mounting for an agreement with private lenders to wipe out part of the €350 billion Greek debt, as Athens faces loan repayments of €14.4 billion on March 20.

French Economy Minister Francois Baroin yesterday said talks were "difficult" but progress had been made on the privately-held debt swap.

"In any case, the rendezvous is on February 13 at the latest," Baroin said, referring to the tentative deadline for a deal.

A senior government official yesterday said "superhuman" negotiations with auditors from the troika had made progress but that certain gaps remained.

Chief among them is the public creditors' demand for labour cost cuts, rejected by unions and by the three-party coalition backing Papademos' government.

Opponents argue that further reductions will exacerbate a recession already fuelled by two years of austerity measures.

Wage costs

Wage costs to Greek businesses fell by €9.2 billion or 25 per cent from 2009, Labour Minister George Koutroumanis told parliament last week.

The fall caused a €4.2m billion drop in contributions to the country's main social insurance fund IKA, he said.

George Karatzaferis, whose far-right party LAOS is one of the coalition's three partners, on Saturday had threatened to reject the Eurozone bailout deal.

"I do not function well under conditions of blackmail," Karatzaferis told a party gathering in Thessaloniki.