Greek talks at critical stage as deadline looms

Date: Monday 06 Feb 2012

After a meeting last night between the three parties of Greece’s coalition government, Prime Minister Lucas Papademos announced that they had agreed on “basic issues”. However, Greek paper ekathimerini has reported that the two smaller party heads remain opposed to excessive austerity and that talks will continue today.

So far Athens has agreed on measures to cut spending in 2012 by 1.5% of gross domestic product, secure the viability of auxiliary pensions, tackle competitiveness by cutting “wage costs and non-wage costs” and recapitalising the banks.

Negotiations continue to crawl forward and Greek finance ministerEvangelos Venizelos described the difficulties: “The gap between the successful completion of procedures and a deadlock, which could be accidental or due to a misunderstanding, is very small. We are on the razor’s edge,” he said.

Greek officials must come to an agreement on austerity measures in order to get approval to receive the second €130bn financing package from the International Monetary Fund, European Central Bank and European Union. Eurogroup Chairman Jean-Claude Juncker told Der Spiegel that a default could not be ruled out without an agreement on the terms.

“If we should determine that everything is going wrong in Greece, then there would not be a new programme, then that would mean that in March a declaration of bankruptcy would occur,” he said.

Greek leaders meet again this morning with an 11:00 deadline in Athens to reach a final deal.

JM

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