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Greek Crisis Talks for Debt Deal Pushed to Monday

CNBC.com

Crisis talks on a debt deal for Greece among the three leaders of parties supporting the coalition government were suspended and will continue Monday.

Greece is racing to finalize austerity reforms needed for a new 130 billion euro ($171 billion) bailout without which it would face bankruptcy in late March. But in a country deep in recession, with unemployment at 19 percent, many politicians and unions oppose more austerity measures.

The three party leaders held a five-hour meeting late Sunday with Prime Minister Lucas Papademos to hammer out a deal with debt inspectors representing euro zone countries and the International Monetary Fund , but failed to reach an agreement.

An announcement from Papademos’ office said the three had agreed on measures to cut spending in 2012 by 1.5 percent of gross domestic product — about 3.3 billion euro ($4.3 billion) — improve competitiveness by cutting wages and non-wage costs, such as social security contributions, reduce auxiliary pensions and re-capitalize banks without nationalizing them.

But the three leaders — socialist George Papandreou, Antonis Samaras of conservative New Democracy and Giorgos Karatzaferis of the rightist Popular Orthodox Rally — differed as to what this would mean in detailed proposals.

Samaras said upon leaving the talks that Greece's creditors “are asking for more recession which the country cannot bear. I am fighting, with all my means, to prevent this.”

Papandreou objects to cutting actual wages and wants the state to take over banks, at least temporarily. His socialist party executive is meeting at the moment to consider these proposals.

“Political party leaders are obliged to provide a first response to the proposals by” Monday morning, socialist party spokesman Panos Beglitis told reporters after the party leaders' meeting with Papademos.

Papademos is due to resume talks with representatives of the “troika” of Greece's creditors — the European Union, the European Central Bank , and the IMF — later Sunday and will be joined by Finance Minister Evangelos Venizelos and Labor Minister Giorgos Koutroumanis.

Papademos and Venizelos also met separately with representatives of banks in an effort to complete a bond swap deal that would reduce Greece's debt by 100 billion euros ($131.6 billion). The talks involved Charles Dallara, managing director of Washington-based Institute of International Finance, and Jean Lemierre, senior adviser to the chairman of French bank BNP Paribas.

Josef Ackermann, the CEO of Germany's Deutsche Bank and the IIF's board chairman, is also in Athens.

Unions Plan 24-Hour Strike

Unions and employers’ associations have warned that private-sector wage cuts would deepen the nation's recession, now in its fourth year. Greece's two major labor unions plan a 24-hour strike on Tuesday against austerity measures and reforms demanded by international lenders in exchange for a new bailout package, union officials said on Sunday.

“We are planning a one-day strike on Tuesday,” Ilias Iliopoulos, secretary general of public sector union ADEDY, told Reuters. “Despite our sacrifices and despite admitting that the policy mix is wrong, they still ask for more austerity.”

ADEDY and its private sector sister union GSEE represent about about 2 million workers or roughly half the country's workforce. They have staged repeated strikes since the country first resorted to bailouts from foreign lenders in 2010.

A GSEE official said the two unions would on Monday finalize plans to strike.