PM prepares to seek compromises with party leaders

Prime Minister Lucas Papademos is to meet the leaders of the parties in his coalition government late on Thursday, or more likely on Friday, as he attempts to conclude negotiations on Greece?s new bailout package.

Papademos is waiting for the conclusion of a meeting of PASOK?s parliamentary group on Thursday afternoon before calling the three leaders for a meeting, where they are likely to agree on the structural reforms on which Greece? next financial package will be based.

PASOK leader George Papandreou met with Finance Minister Evangelos Venizelos on Thursday morning. Venizelos is favorite to succeed Papandreou as PASOK president in mid-March leadership elections. However, PASOK MPs could remove Papandreou by holding a vote of no confidence during the meeting of the parliamentary group.

Venizelos brief Papademos on the state of play in Greece?s negotiations with its bondholders over a debt restructuring plan, or PSI. The Wall Street Journal reported on Thursday that an agreement is being held up by disagreement between Germany and the IMF, which has doubts about whether Greek debt will be sustainable even after the bond haircut.

The European Economic Affairs Commissioner Olli Rehn said that Greece?s talks with its bondholders and lenders are very close to conclusion. He said that the negotiations must be completed by Monday, when the Europgroup of finance ministers will meet and could give the green light for a new bailout to progress.

However, a number of issues remain to be resolved, including whether there will be a reduction to private sector wages. Employers and unions were due to meet on Thursday to discuss the issue.

“Today is a very important day,» government spokesman Pantelis Kapsis told Greek MEGA television on Thursday.

“The discussions are very tough. On the one side, there is pressure to restore the economy’s competitiveness fast. We are saying that there is clearly an issue of competitiveness. On the other hand, there is also the question of recession which is very important for Greece.?

All three coalition parties ? PASOK, New Demcoracy and Popular Orthodox Rally (LAOS) have expressed reservations about some of the reforms being proposed. But Kapsis said that compromises would have to be made.

“In the end, we’ll have 10 red lines and the need to make a decision: Are we going to stick to those red lines or do we want the loan? It’s that simple,» he said.

As a country, we are on the verge of an official default,» Kapsis added. «We have borrowed a lot of money all these years and we now have our backs against the wall. We need to make our own decisions. Nobody will get us out of this situation.”