Greek unions strike before leaders' talks

By @ibtimes on

Greek party leaders face crunch talks on Tuesday to secure a new international bailout and avoid a chaotic debt default, caught between EU demands that they accept painful reforms now and a national strike against more austerity.

Prime Minister Lucas Papademos negotiated through most of the night with Greece's European Union and IMF lenders, ending at 4 a.m. (0200 GMT) when the 24-hour strike was about to begin, closing ports and tourist sites and disrupting public transport.

Papademos, a technocrat parachuted in to lead the Greek government late last year, must persuade leaders of the three parties in his coalition government to accept the EU/IMF conditions for the 130-billion-euro ($170-billion) rescue.

We must find a solution today, said a government official before the leaders' talks, which will start later in the day.

Another official said the government was preparing a text to put to the leaders for their approval, suggesting some movement in the process.

With Greece's future in the euro zone in question, German Chancellor Angela Merkel said time was of the essence and there are growing signs that euro zone officials have lost patience.

They say the full package must be agreed with Greece and approved by the euro zone, European Central Bank and International Monetary Fund before February 15.

This is to allow time for complex legal procedures involved in a bond swap deal - under which the value of private investors' holdings of Greek debt will be cut radically in value - so Athens can get rescue funds before March 20 when it has to meet heavy debt repayments or suffer a chaotic default.

DON'T BOW YOUR HEADS!

Scuffles broke out as protesting strikers tried to climb steps leading to parliament, chanting: No to mediaeval labor conditions, don't bow your heads, show resistance!

Riot police rushed to block their way as some protesters sprayed red paint on the steps and a wall next to the tomb of the unknown soldier, which commemorates the fallen in past Greek campaigns. Other protesters burned a German flag.

Ceremonial guards in traditional Greek kilts, a top Athens tourist attraction, were evacuated during the scuffles.

The protesters were pushed back on to the adjacent Syntagma Square, where riot police created a defensive line.

However, the turnout was noticeably smaller than at other protests in recent months, with heavy showers dampening the marchers' spirits. They were saved by the rain. The weather didn't allow all protesters to take to the streets and show their anger, Ilias Iliopoulos, general secretary of the public sector union ADEDY, told Reuters.

One civil servant watching the protests expressed a weary anger at the austerity imposed already, which has almost halved her monthly pay to 900 euros, and higher taxes.

I wouldn't mind paying for the next two years if I knew austerity would take us somewhere, said 32-year-old Leto Papadopoulou. But this crisis seems endless. In 10 years from now, I will be a lost case for the labor market.

Merkel told Athens on Monday to make up its mind fast if it would accept the deal, and its conditions of reforms to make the Greek economy more competitive that are certain to lead to big cuts in living standards.

Finance Minister Evangelos Venizelos said talks with the troika of lenders - the European Commission, ECB and IMF - were not going well. Unfortunately the negotiations are so tough that as soon as one chapter closes, another opens, he said after meeting troika officials on Monday night.

But a source close to the negotiations said that despite the complexity of the talks, especially on very unpopular labor reforms, Greece and its lenders were making progress.

We are not as far from each other as we were before, the official said, adding the two parties were working to finalize the outline of the memorandum of understanding, or policy program Greece needs to agree to in order to get the bailout.

TOURISTS LOCKED OUT

Early on Tuesday, the strike called by the private and public sector unions GSEE and ADEDY began to bite, bringing the country's main port to a standstill.

No ships departed from Piraeus port this morning, as a result of the seamen's strike, said a coast guard official.

In central Athens, tourists were locked out of the Acropolis and public transport was disrupted during the morning rush hour. State hospitals ran on a skeleton staff and teachers, bank employees and telecoms workers were due to join the action.

With elections likely in April, the party political leaders - who Europe insists must all sign up to the austerity program - face an obvious incentive not to heap more misery on their voters. But if they do not, an unruly default looms.

Greek party leaders face a general election possibly as early as April and have been reluctant to accept yet more austerity to be piled on top of a series of pay cuts, tax rises and job losses imposed since Greece's first bailout in 2010.

After weeks of argument a number major issues have yet to be sorted out at Tuesday's talks.

Greece has yet to identify spending cut measures worth 600 million euros this year, out of a total austerity package of about 3.3 billion euros, a government official said.

The troika was also demanding that private firms' wage costs be cut by about a fifth to improve competitiveness. This would be done by reducing the minimum wage by as much as 20 percent or by scrapping some industry-wide wage bargaining agreements.

The troika also wanted top-up, supplementary pensions to be cut by about 15 percent on average to make the pension system financially viable, the official said.

On the markets, investors moved into the perceived safety of German government bonds, fretting over the Greek indecision. The euro held its ground against the dollar as most traders clung to hopes Greece would clinch the rescue, although nagging doubts kept the common currency in check.

Jean-Claude Juncker, who chairs the group of euro zone finance ministers, backed a plan put forward by Merkel and French President Nicolas Sarkozy to set up a special escrow account into which Greece would make future interest payments as a means of guaranteeing that creditors were consistently paid.

However, Juncker denied that the euro was in danger because of the debt crisis. The euro will outlive us all, he told German Inforadio on Tuesday.

($1 = 0.7646 euros)

(Additional reporting by Karolina Tagaris, Tatiana Fragou, Ingrid Melander, Harry Papachristou and Lila Chotzoglou in Athens, and Gareth Jones in Berlin; Writing by Deepa Babington and David Stamp; Editing by Mike Peacock)

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