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Greek leaders unable to agree on key spending cuts

Riot police guard the entrance to the Development Ministry in Athens, which was occupied by protesting PPC electricity company employees Wednesday. The protesters object to plans to privatize part of the country’s power distribution service.

Associated Press

Riot police guard the entrance to the Development Ministry in Athens, which was occupied by protesting PPC electricity company employees Wednesday. The protesters object to plans to privatize part of the country’s power distribution service.

ATHENS, Greece — Crucial talks to discuss austerity cuts in Greece broke down after eight hours Wednesday as leaders of the three parties backing the country's coalition government failed to agree to demands from international creditors for substantial cuts to state and private pensions.

Prime Minister Lucas Papademos left the meeting to negotiate with the "troika" of Greece's creditors — the European Union, the European Central Bank and the International Monetary Fund — on the cuts needed for Greece to reach the fiscal targets prescribed by the troika for 2012. He is joined in the negotiation by Finance Minister Evangelos Venizelos and Labor Minister Giorgos Koutroumanis.

A statement issued from Papademos' office says that he and the three leaders — socialist George Papandreou, conservative Antonis Samaras and right-wing populist Giorgos Karatzaferis — "agreed on all points (presented by the creditors) except one which calls for further discussion and elaboration with the troika."

At stake is a 130 billion euro ($172 billion) bailout that is vital if Greece is to avoid bankruptcy as early as late March.

The leaders' talks hit a snag over a 300 million euro gap in cuts needed to reach the 2012 fiscal target. The troika has proposed cuts in supplementary state and private pensions above a threshold level of 150 euros. Private pensions in Greece are state-guaranteed.

Samaras has made clear his objections, proposing as an alternative a 300 euro threshold plus "fiscally equivalent measures."

Among the proposals the leaders did accept is a 22 percent cut in the gross monthly minimum wage from 751 euros to 586 euros, with the minimum wage dropping to 527 euros a month for those under 25.

Complicating negotiations are the political leaders' posturing over which party cares more for the people. Samaras, said that he "wants to ease the people's suffering," adding that the negotiation is difficult and that "for some, it is a novelty to negotiate," a barb aimed at Papandreou, whose two-year socialist government gave way to the coalition government in November. Samaras is the favorite at polls to win a possible snap election.

Speaking through his party spokesman, Panos Beglitis, Papandreou countered that he would not let Samaras' objections on supplementary pensions hurt people's main pensions. "We are ready to scuttle any agreement," on that point, said Beglitis.

Jacob Funk Kirkegaard, research fellow at the Peterson Institute for International Economics, said the lack of progress made during Wednesday's talks highlights the "certain amount of political theater involved here."

Greek leaders unable to agree on key spending cuts 02/08/12 [Last modified: Wednesday, February 8, 2012 10:57pm]
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