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EU presses Greece on austerity details

Friction rises ahead of bailout

Students and teachers marched through Athens yesterday to protest cuts that Greece’s government is making to meet the European Union’s conditions for a new installment of aid. Students and teachers marched through Athens yesterday to protest cuts that Greece’s government is making to meet the European Union’s conditions for a new installment of aid. (Louisa Gouliamaki/AFP/Getty Images)
By James G. Neuger and Rebecca Christie
Bloomberg News / September 23, 2011

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BRUSSELLS - The European Commission pressed Greece yesterday to spell out key elements of a new savings package, such as the timetable for state asset sales, in order to qualify for the next installment of aid.

Stabilizing Greece’s situation is the “immediate challenge’’ facing European officials, who are grappling with the debt crisis and trying to prevent contagion from any “uncontrolled default,’’ the EU’s economic and monetary affairs commissioner, Olli Rehn, said in a speech delivered in Washington yesterday.

“A condition for the new program is that Greece implements all the corrective measures required, without any wavering,’’ Rehn said.

“In the past couple of weeks, Greece has gone a long way toward meeting these demands, but we are not quite there yet.’’

Finance Minister Evangelos Venizelos told lawmakers in Athens that he preferred Greeks suffer wage and pension cuts rather than endure the economic collapse of the country.

Greeks must make the decisions to meet fiscal targets, Venizelos said, in comments broadcast live on state-run Vouli TV.

Referring to austerity measures announced this week, he said there was no time for delay and that what was being decided was the fate of the July 21 second financing package for Greece, not simply the sixth tranche of loans from the first bailout.

Representatives from the commission, European Central Bank, and International Monetary Fund will not return to Athens until the Greek government reveals more details of the program, the European commission said.

The goal is to resume the talks next week.

“These elements were not finalized last week nor earlier this week, so they are still on the table and need to be finalized before the task force goes back,’’ a commission spokesman, Olivier Bailly, told reporters in Brussels yesterday.

Greece promised cuts in pensions and public workers’ wages Wednesday in an effort to persuade European governments and the IMF to release an $11 billion loan installment to save it from default next month.

Greece, the country at the origins of the European debt crisis, is under pressure to clarify the schedule for selling state assets and translate a pledged overhaul of the civil-service system into savings.

The commission, ECB, and IMF representatives will “hopefully’’ return to Athens early next week to pave the way for a decision on the next loan, Bailly said.

IMF and European officials are pressing Greece on budget cuts now because they have maximum leverage, Piraeus Bank SA analysts said in a research note.

Greece does not have a bond maturing until December, and euro-area governments have yet to ratify a July 21 agreement that includes a second bailout for the country and an overhaul of the region’s rescue fund.

“This is possibly the last opportunity to press in the direction of structural changes and spending cuts,’’ said Piraeus Bank analysts, led by Ilias Lekkos, the chief economist.

Although there has been a rise in friction between Greece and the representatives before the release of each aid installment, “this time the differences are particularly pronounced, as the troika appears determined to impose significant spending cuts and, as a result, a substantial reduction in the size of the state,’’ Piraeus said.

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