Greek Lawmakers Deciding Whether to Accept New Austerity Pact

Posted February 8th, 2012 at 10:20 am (UTC-5)
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Debt-ridden Greece is facing a final decision whether to adopt steep new austerity measures to ease its precarious financial state and avoid a default on its loans next month.

Greek lawmakers representing socialist, conservative and far-right political parties met Wednesday to consider a 50-page plan negotiated with the country's international creditors. It would cut Greece's minimum wage by about 20 percent, reduce some pensions for retirees by 15 percent and abolish 15,000 government jobs. Greek workers staged a one-day general strike on Tuesday to voice their opposition to the plan.

The international lenders — the European Union, the European Central Bank and the International Monetary Fund — have demanded that Greece's fractious political parties all adopt the austerity plan, so that the spending cuts cannot be rescinded after a new parliament is elected, tentatively in April. Without the approval, the lenders say they will not hand Greece a new $170 billion bailout, the country's second in two years. It is money the Athens government says it needs to make $19 billion in bond payments in March to avoid the default.

News agencies reported that if the austerity plan is approved, along with a tandem deal with private creditors to cut $130 billion of the debt that Greece owes them, the continent's central bank could further ease the country's debt woes by agreeing to take less than the face value of the amount the country owes it.

European leaders have grown impatient over the weeks-long negotiations Greece has held with its creditors, voicing fears that a Greek default on its loans could lead to its departure from the 17-nation bloc that uses the euro and turmoil on world financial markets.

German Chancellor Angela Merkel has pushed Greece to resolve its financial problems. But Ms. Merkel says she does not advocate Greece leaving the eurozone and does not think it will happen.

((Optional soundbites, Merkel, in German: “The euro is not only an economic project, it is also a political project. I will not take part in forcing Greece out of the euro. This would have unforeseeable consequences…. Greece will not decide to leave the euro, according to all the information that I have. I do not want Greece to leave the euro and so the question does not arise.”