GREEK PRIME minister George Papandreou is coming under renewed pressure to ensure his MPs back a drastic new austerity plan amid anxiety among EU leaders that a crucial vote in Athens next week is “too close to call”.
At an EU summit last night, in private conversation with French president Nicolas Sarkozy, Taoiseach Enda Kenny raised the Government’s campaign for a reduction in the cost of the Irish EU/IMF bailout.
There was no settlement of the dispute over Ireland’s corporate tax rate but Mr Kenny’s spokesman said “both leaders agreed to continue a process of talks” which was already under way.
The spokesman said the Taoiseach also raised Ireland’s bailout at the wider meeting and told his counterparts that the standoff was “making it very difficult for us” in the effort Ireland was making.
EU leaders issued a communique welcoming Ireland’s progress in the execution of its reform programme.
After hours of talks on Greece, the leaders urged “all parties” in Greece to support a plan agreed with the EU-IMF “troika”.
“When you are in front of the abyss there is a lack of hope,” European Council president Herman Van Rompuy told reporters late last night in Brussels.
“With a debt of 130 per cent of GDP, if you implement the programme year after year, consumer confidence will return.”
Despite Mr Papandreou’s private claims that he had already enough support to achieve a parliamentary majority next Tuesday, diplomatic sources said there was little certainty.
Apprehension about the vote by the Greek parliament, crucial for the release of a €12 billion bailout loan, has rattled markets and sparked fear that the country might default on its debt next month.
Greek government sources said Athens had won approval in principle from the “troika” for a limited number of revisions to the austerity plan, including an increase in the tax-free allowance.
While Greece needs a second international bailout to overcome anticipated funding difficulties next year, EU leaders are reluctant to discuss that in detail before the reform plan is approved by parliament.
The turmoil is causing anxiety in Dublin that the Government’s recovery plan could be swept off course.
After a pre-summit meeting with centre-right leaders, Taoiseach Enda Kenny pointed to acute concern about the situation.
“The decision in the Greek parliament by the government, by the opposition parties, is crucial, absolutely crucial to the future of Europe,” Mr Kenny said.
The two-day summit kicked off with a flurry of political activity.
Centre-right leaders urged Greek opposition leader Antonis Samaras to cast aside his rejection of the recovery plan when he spoke with them at meeting of the European People’s Party, Fine Gael’s affiliate in the EU parliament.
“I couldn’t take part in the meeting, which should be good news to Mr Samaras, since I would have insistently called on him to give up his negative stance,” said Luxembourg’s prime minister Jean-Claude Juncker, who presides over the group meetings.
Before the summit German chancellor Angela Merkel and Mr Sarkozy held a private meeting with European Central Bank chief Jean-Claude Trichet, Mr Juncker, EU Commission chief José Manuel Barroso and Mr Van Rompuy.
Mr Papandreou joined them later, telling reporters his country was “strongly committed” to the execution of drastic fiscal and privatisation measures.