ATHENS (Reuters) - International lenders will press
Greece’s fractious political parties on Saturday to give written guarantees that they will back austerity measures under a bailout deal aimed at saving the country from financial ruin.
The leader of conservative New Democracy — one of three parties in the new national unity government of technocrat Prime Minister Lucas Papademos — has stirred dismay in the EU by refusing to sign any pledge, saying his word is enough.
New Democracy chief Antonis Samaras has said his support for the interim coalition is conditional and temporary, and has begun jockeying for position before an election tentatively slated for February 19 in which he wants to win a big majority.
Representatives of the European Commission, the European Central Bank and the International Monetary Fund — the “troika” which monitors Greek compliance with its rescue deals — were expected to meet Samaras in Athens on Saturday.
They will also hold talks with the other coalition parties, the Socialist PASOK and the small far-right LAOS, to measure their commitment to implementing a wave of spending cuts and tax increases needed to unlock more loans.
Underscoring the pressure on Athens, Dutch Finance Minister Jan Kees de Jager said on Friday the parties had “to make a clear and unequivocal choice in writing” by signing a pledge.
“Are they with us or not? We don’t have the luxury of patience any longer,” he said.
EU leaders, weary of Greece’s failure to deliver on fiscal targets, fear its politicians will try to wriggle out of their commitments as the early election looms, especially if Athens gets an 8 billion euro installment under an old bailout deal.
The new bailout, approved last month, is worth an additional 130 billion euros ($176 billion) and is meant to keep the country of 11 million people financed until 2014.
Greece’s debt troubles over the past two years have turned into a major European crisis that threatens the survival of the euro and the stability of the global economy.
As Greek politicians bickered this week, borrowing costs for much larger euro zone countries such as Italy and Spain were in the danger zone while even France’s rose.
Support for both PASOK and New Democracy, which have dominated Greek politics for decades, has eroded over the past week, opinion polls show.
However, more than two thirds of voters back Papademos, a former central banker who is the sole technocrat in a coalition otherwise made up of party politicians.
New Democracy repeated an oft-made call on Friday to scrap the austerity measures prescribed under the bailout — known as the “Memorandum” in Greece — in favor of pro-growth policies.
“The Memorandum needs to be renegotiated. A recipe that doesn’t work needs to be changed,” it said in a statement.
It is not clear whether the EU and IMF will demand more financial pain from Greeks.
Papademos’s cabinet submitted a draft 2012 budget to parliament on Friday that foresees no new austerity measures next year, provided that reforms are enacted.
The draft, expected to be approved in the next few weeks, predicts a fifth year of recession but says a plan to convince Greece’s private creditors to take a 50 percent loss on bond holdings could cut the budget deficit by more than a third.
The document forecasts that Greece’s 220 billion euro economy will shrink 2.8 percent in 2012 after a 5.5 percent contraction this year.
Writing by Gareth Jones; Editing by David Stamp