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Greek coalition chiefs to hold new austerity talks

31 July 2012 22:27 (UTC +04:00)

Baku-APA. The heads of the three parties in Greece’s new coalition government are to meet again Wednesday to try and agree on further austerity cuts strenuously demanded by the country’s bailout creditors, APA reports quoting AP.

Despite two meetings in less than a week, conservative Prime Minister Antonis Samaras and junior coalition party chiefs have not finalized new politically costly measures intended to save â‚¬11.5 billion ($14.13 billion) in 2013 and 2014.

After the second meeting Monday, Samaras’ partners played down the need for a swift decision, saying that coalition leaders agree on Greece’s overall strategy.

That is unlikely to appease the debt-crippled country’s creditors, who have an inspection team in Athens to pick over the Greek austerity program. If their report is negative, the vital rescue loans will stop, and the country will go bankrupt and may have to ignominiously exit Europe’s common euro currency unleashing deep financial and social turmoil.

Chief inspectors from the so-called troika â€” the European Union, the International Monetary Fund and the European Central Bank â€” held new talks with Samaras early Tuesday.

A laconic government statement only said that the meeting served "to provide clarifications on certain economic matters."

The new government, formed in June after two inconclusive national elections, has pledged to honor earlier Greek promises for further cutbacks to tame the country’s bloated budget deficit. Athens has also committed to reform its inefficient, well-staffed public sector, privatize state assets and fully open protected professions to competition.

The three-party coalition has said it wants a two-year extension to the implementation deadline, to 2016, due to a punishing recession expected to reach a cumulative 20 percent since 2008.

But the austerity and reform program is well off track due to earlier foot-dragging, half-hearted implementation and three months of political inertia forced by the two elections.

Greeks have been clobbered with repeated income cuts and tax hikes over the past 2 Â½ years, in exchange for EU and IMF rescue loans.

The â‚¬11.5 billion cutbacks are expected to include new cuts in pensions and health spending â€” a hard sell to an austerity-weary population that in June came close to electing a radical left party pledging to tear up the country’s bailout commitments.

That is creating cracks in Samaras’ uneasy coalition. Neither Socialist PASOK nor the moderate Democratic Left appears eager to sign off on the entire austerity package, despite broad agreement on many of the measures.

PASOK leader Evangelos Venizelos, who as former finance minister agreed on all the austerity pledges, told party lawmakers Tuesday that talks with creditors "cannot focus on one issue, such as the famous list of measures worth â‚¬11.5 billion."

He insisted that PASOK would continue to support the government.