Greek debt talks in disarray as PM delays meeting again

Tue, Feb 7, 2012, 00:00

Efforts to avert a Greek debt default slid further into disarray tonight as Greek prime minister Lucas Papademos postponed crucial talks with his government for a second day.

Greece was fighting to avoid economic disaster tonight amid political stalemate, nationwide strikes and controversial claims that the country could leave the euro zone without triggering a single currency crisis.

After several delays, Mr Papademos had been due to meet the chiefs of the three parties in his coalition tonight.

Originally scheduled for Monday, these talks were scrapped at the last minute and are now expected tomorrow.

The confused situation in Athens has raised further questions over Mr Papademos’ power to ensure his administration backs the harsh new austerity sought by the EU-IMF “troika” in return for a €130 billion bailout deal.

As increasingly fraught negotiations went on in Athens over more austerity measures being demanded by Brussels, European Commission vice-president Neelie Kroes raised the temperature by insisting that the euro zone would not collapse if Greece withdrew.

Ms Kroes told Dutch newspaper Volkskrant: “It’s always said that if you let one country get out, or ask it to get out, then the whole structure collapses. But that’s simply not true.”

A Commission spokesman in Brussels denied that Ms Kroes had broken ranks, insisting: “The Commission line is very clear: we want Greece to remain a member of the euro area.

“Commissioner Kroes has not asked for Greece to leave the euro area, neither has she said it is a likely scenario. We
consider that interview given by Commissioner Kroes is not in contradiction with the Commission line.”

European Commission president Jose Manuel Barroso went out of his way to reaffirm support for Greece: “The Commission has made it clear from the beginning that it is very important not only for Greece but the euro and for the European project to keep Greece in the euro.”

He said all eyes were now on Athens and it was up to the Greek political parties to “make a commitment” to back tougher austerity measures “so that we can keep Greece in the euro area”.

Without a deal soon, a second bailout for Greece worth €130 billion will be in doubt, risking Greek default on debt repayments due in late March.

But the Greek government is facing growing strikes, which are firmly backed by the European Trade Union

“The new austerity package being discussed to avoid a default by Greece is unacceptable,” said ETUC general secretary Bernadette Segol.

“Greek workers and citizens have been pushed to the limit. Successive austerity plans have plunged the country ever
deeper into crisis.

“The new measures being considered are simply not defensible: reduction in the minimum wage, cuts in supplementary pensions and immediate job cuts in the public service.

“Labour law is being flouted and men and women are being crushed in the process. We warn all those who are putting pressure on Greece or justifying such pressure: workers cannot take any more.”

Dutch finance minister Jan Kees de Jager, in a statement countering the claims of Commissioner Kroes, warned that the austerity measures were vital: “A chaotic situation in Greece could hurt all of us and that’s why we are doing all we can to keep Greece in the euro zone — but it is essential the Greek leaders act now and implement all necessary measures.”

Additional reporting by Reuters