Greek bailout talks inconclusive, to continue after EU summit

Greek Prime Minister Antonis Samaras (C) walks between reporters outside the parliament after a meeting among party leaders in Athens, Oct 16, 2012. [Photo/Agencies]

ATHENS - Greek Prime Minister Antonis Samaras' meeting with the two party leaders in his coalition government over a new austerity package needed to unlock further bailout aid from international lenders ended inconclusively on Tuesday in Athens.

The result came as no surprise to political analysts in Greece, as talks with representatives of European Union (EU) and International Monetary Fund (IMF) lenders over fresh spending cuts worth 13.5 billion euros ($17.5 billion) for 2013-2014 seem to have hit a snag.

Samaras had earlier aimed to present a final deal during Thursday's summit to secure the immediate release of 31.5 billion euros of bailout funds to Athens.

Negotiations between the Greek government and EU/IMF auditors have continued for more than a month without a breakthrough. Greek Finance Minister Yannis Stournaras told the media that the dialogue would continue after the EU summit in Brussels on Oct 18.

"We need the rescue loans installment shortly, otherwise we will die of suffocation," Stournaras warned, addressing the parliament's economic committee on Tuesday, expressing optimism that the disbursement could be made by mid-November.

Without the tranche, debt-laden Greece could go bankrupt and possibly exit the eurozone by January as cash reserves dry out, Greek officials warn.

The country is currently staying afloat with multi-billion euros assistance since 2010 in return for implementing austerity and reform programs that have repeatedly missed deficit reduction goals and timetables.

In order to tackle recession and boost growth, Samaras and his coalition partners have stressed the need to balance austerity with the protection of the most vulnerable Greeks to safeguard social cohesion. Meanwhile, the general public continues to be frustrated with cuts on salaries, pensions and tax increases.

"We cannot vote in favor of measures which abolish labor rights, as auditors suggest. If implemented, these measures would fuel recession and unemployment. These demands exceed the strength limits of Greek society," Fotis Kouvelis, leader of the Democratic Left, the smaller party in the coalition, said after Tuesday's meeting.

"They play with fire which endangers Greece and the entire eurozone. The delay in negotiations is not to the benefit of Greece and Europe. Further measures in labor relations do not facilitate efforts to boost competitiveness," added socialist PASOK party chief Evangelos Venizelos.

Arguing that more radical policies are needed to secure the success of the austerity and reform drive underway, EU/IMF auditors insist on more government spending cuts, according to Greek media reports.

Foreign officials are said to be pushing for the immediate dismissal of 15,000 civil servants this year, fresh cuts on pensions, wages and tax hikes, and swift structural reforms such as the liberalization of closed markets, professions and changes in labor relations.

In addition, it is being sought to raise the retirement age from 65 to 67 years, introduce a six-day 40-hour workweek in the private sector, and reduce the severance payment given to laid off workers by 50 percent.

Any austerity package needs to be voted by the 300-member Greek parliament, where the three-party coalition holds a 179-seat majority.

On Tuesday, Kouvelis and Venizelos said their parties would not back the package if it contains harsh reforms in the labor market. The conservative New Democracy party of Samaras holds only 129 seats.

The approval of the package is a prerequisite for further financial aid to Greece. Political analysts in Athens said most differences between the parties would be hammered out in the coming days.

As talks with auditors continue, anti-austerity protestors continue to take to the streets. Workers in public hospitals held a demonstration in Athens on Tuesday afternoon, while journalists, lawyers, doctors and pharmacists plan to hold a 24-hour strike on Wednesday. A new nation-wide general strike has been called for on Thursday.