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Greek party leaders prepare for crucial debt talks
Question of the Day
ATHENS (AP) — Greek coalition leaders are preparing their responses to a draft deal on steep cutbacks demanded by creditors in return for a 130-billion-euro ($170 billion) bailout that will shield the country from a looming bankruptcy.
Their decisions will be announced at a meeting with Prime Minister Lucas Papademos, originally scheduled for 1 p.m. (6 a.m. EST) Wednesday but delayed for at least four hours to let the three coalition parties study the 50-page English-language document, drawn up with the country’s debt inspectors.
The coalition talks have been postponed repeatedly over the past three days to make time for exhaustive negotiations with representatives of the European Union, the European Central Bank and the International Monetary Fund, on whose approval the continued flow of Greece‘s vital rescue loans depends.
As anger mounts in Greece at the prospect of further economic pain, patience is running out abroad.
“This is not a question one can take a lot of time to tackle,” Steffen Seibert, Mrs. Merkel’s spokesman, said. “It is important that the negotiations now come to an end,” he said.
Without the bailout, Greece would not have enough money to pay off a big bond redemption payment due on March. 20, triggering a default that risks sending shockwaves throughout financial markets and the global economy.
“We face crucial decisions … that will determine the country’s course in coming years,” Deputy Finance Minister Philippos Sachinidis told Parliament. “These days are among the most crucial of our post-World War II history.”
The three organizations, known collectively as the “troika,” have demanded further measures to improve Greece‘s competitiveness and economic stability — including new private-sector wage and pension cuts; public-sector layoffs; and cuts in health, welfare and defense spending — before they sign off on the new 130-billion-euro bailout.
The troika’s proposals have horrified unions, who held a general strike Tuesday. Greeks already have been hit with a spate of salary cuts and increased taxation over the past two years, amid record-high unemployment and a five-year recession.
Labor Minister Giorgos Koutroumanis warned Parliament last week that a demanded reduction in the 751-euro ($985) monthly minimum wage would quicken the Greek economy’s contraction and hit the revenues of struggling pension funds that have already lost 20 billion euros ($26 billion) since 2009.
But Athens has minimal ground for maneuvering. Without the rescue loans, the country will default on its massive debts in March, when it faces a 14.5-billion-euro ($19 billion) bond redemption.
Stocks advanced Wednesday, while the euro was trading near two-month highs, as global markets were hopeful a deal would be struck in Athens. Greek shares were up 0.9 percent in afternoon trading.
“We are finally approaching the endgame of the Greek talks,” said Gary Jenkins, managing director at Swordfish Research. “Ultimately it is difficult to see how they can do anything other than agree a deal. After all, the alternative is a disorderly default which could lead to a much deeper economic depression and potential civil unrest.”
Late Tuesday, Greece‘s private creditors signaled progress on a separate, linked agreement that would cut the country’s privately held debt load by 50 percent, or some 100 billion euros ($131 billion).
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