Greece: Debt talks must be done by late Sunday

Greece’s finance minister said negotiations for the bailout deal his country needs to avoid defaulting on its debts must be completed by late Sunday, but that a breakthrough is being held up by demands from debt inspectors for more austerity measures. Evangelos Venizelos said Saturday the negotiations in Athens with rescue creditors for a new (euro) 130 billion ($171 billion) bailout deal are at ‘a very crucial stage.’ Earlier, he joined a two-hour conference call with other eurozone finance ministers, and resumed talks with debt inspectors from the European Union, European Central Bank and International Monetary Fund — known as the ‘troika’ — after a 12-hour meeting with them on Friday. Venizelos also met with Greece’s ministers of health, labor, defence, interior and public sector reform to discuss demands for wage cuts in the private sector and faster staff cuts, including dismissals, in Greece’s large public sector. ‘The euro group conference call was very difficult. There is great anxiety and great pressure from (the troika) as well as individual eurozone member states, each of which has its own priorities,’ Venizelos told reporters, without providing details or naming any of the countries. ‘There is a very small margin separating a successful end in (negotiations) from an impasse that could be due to a misunderstanding,’ he said. ‘We stand at the razor’s edge.’ He said the negotiations must be completed by Sunday night, without saying why. Venizelos said the talks are being held up by demands from debt inspectors to impose cuts in private sector pay and new austerity measures to keep Greece within its tight deficit-reduction targets. ‘We are at the point when we must make decisions and commit to them. Two major issues remain outstanding: labor relations and private sector pay, and fiscal measures required to stay absolutely on target in 2012,’ the finance minister said. Heavily in debt and suffering a fourth year of recession, Greece needs the (euro) 130 billion ($171 billion) rescue deal, backed by eurozone countries and the IMF, to avoid bankruptcy next month. Tied to that agreement is a proposed deal with banks and private investors who hold nearly two-thirds of Greece’s debt that would slash the country’s borrowing costs and save it from a default. The investors, who hold around (euro) 200 billion ($263.2 billion) in Greek bonds, could forgive about half of that in exchange for a cash payout and new bonds with more favorable repayments terms. Top bank negotiators arrived in Athens on Saturday night for more talks. Unions and employers have failed to reach agreement on voluntary cuts in wage costs, arguing that a series of emergency taxes imposed by the crisis-hit government over the past two years have already seen workers lose 14 percent of their income. Stathis Anestis — deputy leader of GSEE, Greece’s largest union — described the latest austerity measures being considered by the government as ‘a recipe for catastrophe’ that would sink Greece into deeper recession. ‘They must respect collective wage deals that have been signed and implemented,’ he said. On Saturday morning, about 100 Communist unionists demonstrated outside the prime minister’s official residence. Without additional international support, Greece would go bankrupt, since it is unable to cover a (euro) 14.5 billion ($19.1 billion) bond repayment on March 20. On Sunday, Prime Minister Lucas Papademos is to meet with the leaders of three political parties backing his three-month-old coalition government.