Greece fails to agree terms with EU creditors

ATHENS, Greece - Greece failed to finalize terms for a crucial euro130 billion ($173 billion) bailout Thursday, but Finance Minister Evangelos Venizelos headed to Brussels to meet top EU officials, hoping to rescue the agreement and stave off bankruptcy.

The Athens talks stalled after leaders of the three parties backing Greece's coalition government approved sweeping new austerity measures but failed to agree to creditors' demands to make euro300 million ($398 million) in pension cuts.

Venizelos issued a dramatic plea to the coalition leaders to swiftly resolve their differences, warning that Greece's "survival over the coming years" depends on the bailout and a related debt-relief agreement with private creditors.

"It will determine whether the country remains in the eurozone or whether its place in Europe will be endangered," he said.

"There is no room for any other expediency: we must look Greeks in the eye, look at the national interest and the interest of our children."

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Venizelos' meeting with finance ministers from the 16 other nations that use the euro is expected to start at 1700 GMT.

The debt inspectors from the European Union, the European Central Bank and the International Monetary Fund — known as the troika — held talks for five hours through the night with Prime Minister Lucas Papademos, Venizelos and Labor Minister Giorgos Koutroumanis.

But they failed to resolve the latest sticking point: a demand for cuts in supplementary pensions worth about euro300 million.

The sum is relatively small compared with the euro130 billion bailout package that depends upon it and which Greece needs to avoid a disastrous default next month.

Government officials said debt inspectors had given the government 15 days to provide a viable alternative to cover the euro300 shortfall.

"The pensions in question are for people of low income, so the issue is important," Evangelos Antonaros, a conservative member of parliament and former government spokesman, told state-run NET radio. "We have been given 15 days to come up with an alternative. Hopefully we can come up with something."

Markets seemed to hold hope that a deal will eventually be reached. European stocks were steady — the Stoxx 50 index of leading European shares was up 0.1 percent while the euro was 0.4 percent higher.

It was not clear whether Papademos would meet again with coalition backers — socialist George Papandreou, conservative Antonis Samaras and George Karatzaferis, leader of the rightist LAOS party.

On Wednesday, the three leaders held talks with Papademos for seven and a half hours and backed a major new austerity program that includes a 22 percent cut in the minimum wage, firings of civil servants, and an end to dozens of job guarantee provisions.

Unions responded angrily to the new cuts and said they would carry out strikes in protest.

"Our rights have disappeared," Vangelis Moutafis, a senior member of Greece's largest union, the GSEE, told private Vima radio.

Asked if his the GSEE would call strikes, he replied: "Of course," adding that protest plans would be announced later Thursday.

The Greek government has already accepted a demand to fire up to 15,000 workers in the public sector in 2012.

"At 2 a.m., all I can say, is a line from the Beatles: 'It is a hard day's night,"' Karatzaferis told reporters upon leaving his party's headquarters for home.

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."

"The political leaders in Athens are campaigning," he said. "They need to be seen by the Greek population as fighting until the very last drop of blood. ... They are facing off against the Germans and IMF and the rest of the world."

A disorderly bankruptcy by Greece would likely lead to its exit from the euro common currency, a situation that European officials have insisted is impossible because it would hurt other weak countries like Portugal, Ireland and Italy. Two years of cutbacks already have seen unemployment rise to around 19 percent and poverty to 20 percent in Greece.

Without help, Greece would not have enough money to pay off a big bond payment due on March. 20, triggering a default that risks sending shockwaves throughout financial markets and the global economy.

Greece has been kept solvent since May 2010 by payments from a euro110 billion ($145 billion) international rescue loan package. When it became clear the money would not be enough, a second bailout was decided last October.

Two years of harsh austerity measures have made Greek voters increasingly hostile.

Some 91 percent of Greeks believe the coalition government is taking the country in the "wrong direction," according to a February tracking poll published Wednesday in Greek daily Kathimerini.

Support for the Socialists, who won a landslide election victory in 2009, has dropped to 8 percent, while the neo-Nazi Golden Dawn group has attracted 3 percent support — enough to achieve representation in parliament, according to Public Issue survey. Conservative New Democracy led with 31 percent, which is not enough to form a government on its own. Sampling data was not available.