NEWS

Pressure on Greece turned up

Prime Minister Lucas Papademos met with New Democracy leader Antonis Samaras Monday in a bid to establish unity in his interim government ahead of a visit by troika officials, as French President Nicolas Sarkozy and German Chancellor Angela Merkel put pressure on Greece to tie up several loose ends so it could receive further loans.

Sarkozy and Merkel, who met in Berlin, added an extra sense of urgency to Papademos?s meeting by stressing that Greece would have to wrap up talks with bondholders on the so-called private sector involvement soon if the next bailout, worth 130 billion euros is to go ahead.

?We must see progress on the voluntary restructuring of Greek debt,? Merkel told a joint news conference. ?From our point of view, the second Greek aid package including this restructuring must be in place quickly. Otherwise it won?t be possible to pay out the next tranche for Greece.?

The two European leaders added that they are also waiting to hear from the troika, made up of the European Commission, the European Central Bank and the International Monetary Fund, on Greece?s progress with structural reforms and getting its public finances under control before deciding on whether to disburse more loans.

Merkel is due to meet IMF Managing Director Christine Lagarde today, when the subject of the Greek crisis is sure to be discussed. German magazine Der Spiegel quoted an internal IMF memo as saying that the three options for Greece are: a haircut bigger than 50 percent, the eurozone providing more than 130 billion euros in loans, or the Greek government conducting a greater fiscal adjustment.

Papademos briefed Samaras on the progress of the PSI talks but sources said that much of their conversation focused on further austerity measures. Samaras said that he was against the idea of the government changing the law on private sector wages in order to reduce the minimum wage and end the practice of employers paying 14 monthly salaries every year. The ND leader insisted that this issue should be decided by employers and labor unions. The centrist Democratic Alliance and the left-wing Democratic Left adopted similar positions.

Samaras also appeared reluctant to agree to further cuts to auxiliary pensions and more austerity measures.