* Leaders leave undertakings to last minute
* Greece likely to equal Great Depression
By Luke Baker and Dina Kyriakidou
BRUSSELS/ATHENS, Feb 15 Euro zone finance
ministers have dropped plans for a special face-to-face meeting
on Wednesday on Greece's new international bailout, saying
political party chiefs in Athens had failed to provide the
required commitment to reform.
A day before euro zone finance ministers had been due to
meet in Brussels to consider the bailout, the man most likely to
be Greece's next prime minister had yet to sign a commitment to
implement the austerity measures demanded by the EU and IMF.
Likewise, the cabinet had yet to fill a 325 million euro
($427 million) gap in the budget cuts promised for 2012, even
though the ministers of the Eurogroup had told Athens that they
needed a complete package of promises and signed undertakings.
With the European Union's patience with Greece close to
breaking point, Eurogroup Chairman Jean-Claude Juncker
downgraded Wednesday's talks to a telephone conference call.
That appeared to kill any chance that the Eurogroup would
approve on Wednesday the 130 billion euro bailout, funds from
which Greece must start getting by next month to avoid a messy
bankruptcy. It is due to hold a regular meeting on Feb. 20.
Juncker said he was awaiting written undertakings from Greek
party leaders on pushing through with the austerity package of
pay, pension and job cuts - which parliament passed early on
Monday as rioters wrecked buildings across central Athens.
"I did not yet receive the required political assurances
from the leaders of the Greek coalition parties on the
implementation of the programme," he said in a statement.
A source familiar with the bailout negotiations said
conservative leader Antonis Samaras had yet to sign the
commitment to implement the deeply unpopular austerity package,
a condition set by the EU/IMF lenders who are weary of broken
Greek promises on economic reform and budget cuts.
"So far Samaras has not given a letter of commitment and
this is a problem," the source told Reuters on condition of
anonymity. The New Democracy party of Samaras declined comment.
A government source said Samaras would provide the
undertaking on Wednesday morning. If he does, he will be
sticking to a pattern among Greek politicians of working right
up to deadlines or beyond, infuriating EU leaders.
This practice of keeping everyone in suspense until the last
minute appears to have cost Greece the full Eurogroup meeting.
Time is running out as it faces a chaotic default if it cannot
meet 14.5 billion euros in debt repayments due on March 20.
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With New Democracy well ahead in opinion polls, Samaras is
frontrunner to become the next prime minister. When parliament
debated the austerity package he indicated that he would try to
renegotiate the terms of the bailout, further sowing doubt in
the minds of European leaders.
A source at the PASOK socialist party, the other coalition
party, said its leader George Papandreou had already provided a
Greece's cabinet negotiated late into Tuesday evening on
solving the other hitch with Brussels, the 325 million euro hole
in the 3.3 billion euros of extra budget cuts which the
government has promised for this year.
All this was played out as Greece's downward economic spiral
accelerated. Data on Tuesday showed that economy shrank seven
percent in the fourth quarter of last year, even more than the
five percent contraction of the third quarter.
Greece is now in its fifth year of recession and is well on
its way to suffering one of the biggest slumps of modern
history. Gross domestic product has contracted 16 percent from
its peak and the austerity will only make that worse.
Prime Minister Lucas Papademos has warned that failure to
back the bailout would consign Greece to economic catastrophe.
But with many Greeks suffering huge cuts in their living
standards and young people burning and wrecking almost 100
Athens buildings in one night on Sunday, some people believe the
catastrophe is already underway.
"On the current path - which is not sustainable in my view -
we may very well see Greek GDP go down 25-30 percent, which
would be historically unprecedented. It's a disastrous crisis
for them," said Uri Dadush, at the Carnegie Endowment think tank
That would put Greece in the same league as the United
States, where the economy shrank 29 percent during the Great
"They're suffering. It's nasty," said Mark Weisbrot,
co-director of the Center for Economic and Policy Research,
another in Washington think tank.
"If you could say with a reasonable probability that the
worst was over, then that would be different. But you can't say
that. They're in for a long nightmare."