Greek junior gov't partner rejects labor reforms

ATHENS, Greece -- The head of a small center-left partner in Greece's governing coalition on Tuesday ruled out new reforms demanded by bailout creditors, which he said would "crush" labor rights in the debt-crippled country.

But although the government insisted that the issue can be resolved within days, the announcement by Fotis Kouvelis of the Democratic Left party is another snag in the country's ongoing efforts to agree on a massive package of cuts and reforms.

Parliament must approve the measures within the next few weeks so that Greece can keep receiving bailout money it desperately needs to stay solvent.

Kouvelis spoke after a meeting of the heads of the three parties in the four-month-old, conservative-led coalition.

The apparent new setback follows a month and a half of tortuous but so far inconclusive talks with the country's creditors _ and among the three party leaders.

Since losing access to money markets in 2010, Greece has survived on international rescue loans, granted on condition of harsh spending cuts to reduce its inflated budget deficits.

Unless Athens manages to reach an agreement with austerity inspectors from the European Union, International Monetary Fund and European Central Bank on the (EURO)13.5 billion ($17.6 billion) worth of spending cuts demanded for 2013-14, it will not receive the next vital loan installment.

That would force the country to default on its debts _ it will run out of cash in mid-November _ and possibly leave the 17-member eurozone.

Finance Minister Yiannis Stournaras, who was meeting late Tuesday with officials from the so-called troika of the EU, IMF and ECB, warned earlier that Greece would "suffocate to death" unless it gets the next cash injection.

"There are some unresolved issues which we expect to settle within coming days," he said after the meeting. "I am convinced that (the troika officials) are doing the best they can to find solutions to the tough problems that truly exist."

Kouvelis did not specify what particular demands he objected to. A government official said on condition of anonymity that the troika is pressing for further reductions in compensations paid to laid-off workers, and a freeze in automatic salary increases due to tenure. The official was not authorized to discuss the issue on the record.

Kouvelis argued that further dilution of labor rights was more than austerity-fatigued Greeks can take, and will worsen a five-year recession and record-high unemployment. "I cannot accept such demands," he said.

Greece is heading for a sixth year of recession. Unemployment is around 25 percent, the highest in decades.

A finance ministry official said senior troika negotiators would leave Athens on Wednesday to attend this week's EU summit in Brussels, but talks would continue with lower-level troika representatives.

A different ministry official said the senior negotiators were not expected back in Athens. "We hope to reach an agreement through e-mail exchanges over the next few days," he said.

Labor unions have reacted to nearly three years of bitter austerity measures with a string of general strikes and protests, often violent.

A new general strike on Thursday will halt or disrupt most public services and transport schedules. Journalists will be on strike Wednesday, halting news broadcasts and preventing the publication of the next day's newspapers.

Earlier Tuesday, Greece raised (EURO)1.625 billion ($2.11 billion) in an auction of 13-week treasury bills at a slightly lower rate of 4.24 percent.


Derek Gatopoulos contributed to this report.