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Greek government delays coalition decision on austerity moves

February 6, 2012 |  9:45 am

REPORTING FROM ATHENS -- With Greece teetering on the brink of bankruptcy, Prime Minister Lucas Papademos on Monday pushed back crucial talks on austerity measures with party leaders in his coalition government, defying calls by European leaders to speed up an agreement that would avert a catastrophic default.

The setback capped statements by Europe’s paymasters, France and Germany, that there would be no further bailouts for the small, debt-saddled country unless all party leaders of the coalition signed off on new list of austerity measures.

No official explanation was offered for Papademos’ decision to push back the crisis talks to Tuesday. A senior government official told The Times that the delay was “required to iron out a final text of measures being drafted” by the prime minister and a team of visiting debt inspectors.

“That draft plan,” the official said, “will then be given to the party leaders for final review. We expect their approval.”

Demands for wage cuts of as much as 20% and added pension reductions have been set by Greece’s international creditors in exchange for a second $140-billion bailout, which Athens desperately needs to avoid default.

While party leaders and Papademos agree on “some basic issues,” according to a government announcement issued after a first meeting on Sunday, a dangerous deadlock emerged over what those cuts, estimated at about $4 billion, would entail.

Government ministers from the 17-nation eurozone had hoped to meet Monday to finalize details of the mammoth bailout, the second patched together by the European Union and the International Monetary Fund in two years.

Still, Greece’s creditors and European peers seem to be losing patience.

Over the weekend, more than 50% of Germans surveyed said it would be best to part ways with their weakest euro partners and for Greece to exit the single currency family.

In Athens, though, labor unions struck back at the prospect of more tough budget cuts being unveiled, calling for a 24-hour nationwide strike. Pundits and politicians also heightened criticism and debate over Europe’s prescription of austerity as a cure for Greece’s debt woes.

“They are not leaving us any options,” said Nikos Cotzias, a professor of economics at Athens University. “It’s like they’re telling us to choose between jumping off the balcony or having your house torched.”

“What would you choose?”


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Photo: A homeless man holds up a sign that reads "I'm Hungry" in front of an empty shop near Athens' main Syntagma Square on Monday as the government delayed talks with coalition parties on an  austerity deal with creditors that might help Greece stave off bankruptcy. Credit: Dimitri Messinis / Associated Press