Greek junior gov't partner blocks reforms deal

Axel Schmidt/dapd

ATHENS, Greece A junior partner in Greece's governing coalition has refused to lift its opposition to a new package of austerity measures, which bailout creditors have been demanding for months in exchange for more rescue loans.

Fotis Kouvelis, who heads the center-left Democratic Left party, said Tuesday that labor reforms to be included in the austerity package would encourage layoffs and further fuel unemployment, already at a record 25 percent as the country faces a sixth year of recession.

Debt-crippled Greece depends on international rescue loans, issued in return for harsh spending cuts and reforms. It must soon agree with creditors on a new austerity package worth 13.5 billion euro ($17.6 billion) over the next two years. Otherwise, it won't receive a desperately-needed new rescue loan payment next month. That could force the country to default on its debt mountain and possibly abandon the 17-country eurozone.

"Neither I nor the Democratic Left lawmakers will accept or vote for the changes in labor rights that (creditors) insist on," Kouvelis said after a meeting of the three coalition leaders under Prime Minister Antonis Samaras, a conservative.

"Labor rights have already been severely weakened, and the demands would mean demolishing whatever rights have survived," he said.

Greek officials say the main sticking point is bailout creditors' insistence on lowering workers' severance pay from private sector companies and scrapping automatic public sector salary increases.

Kouvelis had voiced the same strenuous opposition during the last meeting of the three leaders last week. Since then, Samaras has increased the pressure for a deal, which both Athens and debt inspectors from the European Union, International Monetary Fund and European Central Bank -- collectively known as the "troika" -- have said is possible within days.

Entering Tuesday's meeting -- the latest of nearly a dozen held since late July -- Samaras said: "At some point, we have to finish."

He drove the point more forcefully last week, warning that Greece will run out of money on Nov. 16 and absolutely has to get the 31.5 billion euro ($41 billion) loan installment by then. Finance Minister Yiannis Stournaras warned that without the money, many Greeks would face starvation.

The country has survived on international loans since May 2010, after it found itself unable to borrow from markets at affordable interest rates. The collapse followed Greece's admission that it had repeatedly under-reported the size of its budget deficit, which triggered downgrades of its credit rating to junk status.

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