- Associated Press - Tuesday, February 7, 2012

ATHENS, Greece — Greece’s coalition leaders have once again postponed a crucial meeting on new cutbacks, despite intense international pressure for Athens to bite the austerity bullet if it wants to avoid bankruptcy.

Prime Minister Lucas Papademos’ office said the meeting was now expected to be held on Wednesday.

A spokeswoman said Papademos would be meeting senior debt inspectors from Greece’s bailout creditors — its representatives of the other countries that use the euro and the International Monetary Fund — late Tuesday, instead of the three leaders of his coalition backers.

The EU and the IMF insist Greece must pass further harsh austerity measures, including private sector salary cuts and civil service sackings, if it is to secure a second euro130 billion ($170 billion) bailout to avoid a disastrous default next month and a potential exit from the eurozone.

Late Tuesday, the government was drafting a draft agreement of the austerity deal, a senior government official and a ranking coalition party member told the Associated Press, but gave no further details.

The impending cutbacks have angered Greek unions, who organized a general nationwide strike on Tuesday that stopped train and ferry services, while many schools and banks were closed and state hospitals worked on skeleton staff.

Riot police fired tear gas to repel hundreds of anti-austerity protesters who burned a German flag and tried to break a cordon outside Parliament, chanting “Nazis out!”.

Athens must placate its creditors to clinch a euro130 billion ($170 billion) bailout deal from the eurozone and the IMF and avoid a March default on its bond repayments.

On Monday, Papademos’ government caved in to demands to cut civil service jobs, announcing 15,000 positions would go this year, out of a total 750,000. The decision breaks a major taboo, as state jobs had been protected for more than a century to prevent political purges by governments seeking to appoint their supporters.

Among the measures the European Union and IMF are pressing Greece for is a cut in the euro750 ($979) monthly minimum wage to help boost competitiveness. This reduction would have a knock-on effect in the private sector — because private companies base their salaries on the minimum wage — and even unemployment benefits.

Greece’s coalition party leaders held a first key meeting on the austerity measures on Sunday, and first postponed the second round of talks on Monday by a day so Papademos could complete negotiations with EU-IMF debt inspectors.

The leaders have already agreed to cut 2012 spending by 1.5 percent of gross domestic product — about euro3.3 billion ($4.3 billion) — improve competitiveness by slashing wages and non-wage costs, and re-capitalize banks without nationalizing them. The details remain to be worked out.

Creditors are also demanding spending cuts in defense, health and social security.

Unions and employers’ federations alike have deplored the measures as unfair and unnecessary. Police said Tuesday that some 10,000 people took part in an otherwise peaceful union-organized march against the austerity program. A separate demonstration by about 10,000 Communist unionists ended without incident.

“They are committing a crime against the country. They are driving wage-earners into poverty and wiping out pensioners and the unemployed,” said Vangelis Moutafis, a senior member of Greece’s largest union, the GSEE.

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