ATHENS (Dow Jones)--Greece's political leaders are due to meet Friday in a fresh bid to reach consensus on the country's economic crisis, amid growing fears of early elections and new worries of a potential Greek default.
The meeting, scheduled for 0930 GMT and called by Greece's president at the behest of Prime Minister George Papandreou, will include the heads of the four opposition parties and comes just days after similar talks failed to find common ground.
It also comes amid rising union and popular opposition to fresh austerity measures that Greece's Socialist government wants to take, and as European leaders exert pressure on Greece's opposition to back the reforms.
In a brief statement Thursday, President Karolos Papoulias called the extraordinary meeting for "a debate regarding the situation relating to the issue of the economy."
Earlier this week, Greece's cabinet broadly approved some EUR6.4 billion of new austerity measures to bring the budget deficit back on track this year, as well as steps to speed up the government's ambitious privatization drive.
By the second week of June, the government will also detail a further EUR22 billion in new spending cuts and tax increases to bring the budget deficit below 1% of gross domestic product by 2015.
The new measures are seen as a quid-pro-quo for further financial assistance to Greece, which last year received a EUR110 billion bailout from its fellow European Union members and the International Monetary Fund, and is now asking for another EUR60 billion aid package for the next two years.
European leaders, ranging from European Monetary Affairs Commissioner Olli Rehn to Dutch Finance Minister Jan Kees de Jager, have recently linked the issue of further aid to Greece contingent on the government and the main opposition party reaching consensus on the measures.
A visiting delegation of EU, IMF and European Central Bank officials--now in Athens to help hammer out the details of the austerity package--have also been pressuring opposition New Democracy leader Antonis Samaras to sign on to the package.
While Samaras has indicated his support for some elements of the Greek government's program, particularly privatizations and cuts in public spending, his rejection of the overall austerity program in a statement Tuesday rattled financial markets.
Currently, Greece's Socialist government holds a six-seat majority in the country's 300-member parliament, and enjoys some support from opposition parliamentarians in Greece's smaller parties.
But deep internal conflicts within the ruling party raise the specter of defections when the package comes up for a vote some time in early June, and could potentially even imperil the government's majority.
George Karatzaferis, head of the far-right Laos party--which has been conciliatory towards the government--put the Friday meeting in stark terms: "We either work together for Greece, or we go to elections."
In an effort to find common ground, Greek media reported that Papandreou may consider a cabinet reshuffle that would include individuals explicitly approved by Greece's opposition.
Meanwhile, Luxembourg Premier Jean-Claude Juncker, who is head of the informal eurogroup, the college of finance ministers from the 17 countries that use the euro, spooked financial markets Thursday raising doubts about the next installment of Greece's loan deal.
He said that the IMF, which is responsible for about a third of Greece's loan deal, may not be able to proceed with the next tranche if it concludes that Greece faces an uncovered financing gap next year.
Greece expects to receive that next installment of aid, about EUR12 billion, by June 29. The government says it has enough cash on hand to continue operating until July 15.
-By Alkman Granitsas, Dow Jones Newswires
Source: http://online.wsj.com
The meeting, scheduled for 0930 GMT and called by Greece's president at the behest of Prime Minister George Papandreou, will include the heads of the four opposition parties and comes just days after similar talks failed to find common ground.
It also comes amid rising union and popular opposition to fresh austerity measures that Greece's Socialist government wants to take, and as European leaders exert pressure on Greece's opposition to back the reforms.
In a brief statement Thursday, President Karolos Papoulias called the extraordinary meeting for "a debate regarding the situation relating to the issue of the economy."
Earlier this week, Greece's cabinet broadly approved some EUR6.4 billion of new austerity measures to bring the budget deficit back on track this year, as well as steps to speed up the government's ambitious privatization drive.
By the second week of June, the government will also detail a further EUR22 billion in new spending cuts and tax increases to bring the budget deficit below 1% of gross domestic product by 2015.
The new measures are seen as a quid-pro-quo for further financial assistance to Greece, which last year received a EUR110 billion bailout from its fellow European Union members and the International Monetary Fund, and is now asking for another EUR60 billion aid package for the next two years.
European leaders, ranging from European Monetary Affairs Commissioner Olli Rehn to Dutch Finance Minister Jan Kees de Jager, have recently linked the issue of further aid to Greece contingent on the government and the main opposition party reaching consensus on the measures.
A visiting delegation of EU, IMF and European Central Bank officials--now in Athens to help hammer out the details of the austerity package--have also been pressuring opposition New Democracy leader Antonis Samaras to sign on to the package.
While Samaras has indicated his support for some elements of the Greek government's program, particularly privatizations and cuts in public spending, his rejection of the overall austerity program in a statement Tuesday rattled financial markets.
Currently, Greece's Socialist government holds a six-seat majority in the country's 300-member parliament, and enjoys some support from opposition parliamentarians in Greece's smaller parties.
But deep internal conflicts within the ruling party raise the specter of defections when the package comes up for a vote some time in early June, and could potentially even imperil the government's majority.
George Karatzaferis, head of the far-right Laos party--which has been conciliatory towards the government--put the Friday meeting in stark terms: "We either work together for Greece, or we go to elections."
In an effort to find common ground, Greek media reported that Papandreou may consider a cabinet reshuffle that would include individuals explicitly approved by Greece's opposition.
Meanwhile, Luxembourg Premier Jean-Claude Juncker, who is head of the informal eurogroup, the college of finance ministers from the 17 countries that use the euro, spooked financial markets Thursday raising doubts about the next installment of Greece's loan deal.
He said that the IMF, which is responsible for about a third of Greece's loan deal, may not be able to proceed with the next tranche if it concludes that Greece faces an uncovered financing gap next year.
Greece expects to receive that next installment of aid, about EUR12 billion, by June 29. The government says it has enough cash on hand to continue operating until July 15.
-By Alkman Granitsas, Dow Jones Newswires
Source: http://online.wsj.com
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