Greek leaders seek deal as bankruptcy looms

By Nicholas Paphitis, AP

ATHENS, Greece–Greek party leaders on Tuesday will meet to seek a long-delayed agreement on harsh cutbacks demanded to avoid looming bankruptcy, amid intense pressure from its bailout creditors to reach a deal, a general strike disrupting public services and thousands of protesters taking to the streets of Athens. Heads of the three parties backing the interim government will confer with Prime Minister Lucas Papademos on new salary cuts and job losses, which Greece’s eurozone partners and the International Monetary Fund are demanding to keep the country’s vital rescue loans flowing. The parties were to be handed a draft agreement of the austerity deal before the meeting, a senior government official and a ranking coalition party member told the Associated Press, but gave no further details.

“The document will be given to political party leaders in the afternoon, it isn’t yet finalized, it’s still being drafted,” the government official said. They asked not to be named, citing the sensitive nature of the negotiations. A general strike against the impending cutbacks stopped train and ferry services nationwide, 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!”

No arrests or injuries were reported and the clashes quickly subsided. Police said some 10,000 people took part in an otherwise peaceful march to Parliament under heavy rain, organized by the country’s two biggest labor unions. 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. “They are selling off state assets for nothing. This cannot continue. This crime must be stopped, right now.”

On Monday, Prime Minister Lucas 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. Athens must placate its creditors to clinch a 130-billion-euro (US$170 billion) bailout deal from the eurozone and the IMF and avoid a March default on its bond repayments. Among the measures the EU and IMF are pressing Greece for is a cut in the 750-euro (US$979) minimum wage to help boost the country’s competitiveness. This reduction would have a knock-on effect in the private sector — because private companies also base their salaries on the minimum wage — and even unemployment benefits. Unions and employers’ federations alike have deplored the measure as unfair and unnecessary.