Greek leaders reach deal on austerity cuts

Greek political leaders have reached a deal on new austerity cuts demanded by foreign creditors to release a 130 billion euros ($170b) bailout package, hours before a crucial meeting of EU finance ministers in Brussels, according to the prime minister’s office.

Lucas Papademos’s office said on Thursday negotiations with representatives of the European Union, the European Central Bank and the International Monetary Fund have been successfully concluded.

A statement from Papademos’ office said leaders of the parties in the coalition government have accepted the result of talks with the three organisations, collectively known as the troika.

It said that there is “a general agreement on the content” of Greece’s new financing programme, without which the country would be forced to default on its bond payments next month.

But there are no details yet on what money-saving measures they have agreed.

Finance Minister Evangelos Venizelos set off for Brussels without a complete deal after all-night talks involving leaders of the three Greek coalition parties and chief EU and IMF inspectors left one sensitive issue – pension cuts – unresolved.

Greece needs the bailout by March 20 so it will have enough money to redeem 14.5 billion euros [$19bn] worth of bonds coming due.

But in an early sign of resistance to the deal, a Greek deputy minister has resigned.

Yannis Koutsoukos, deputy labour minister, a member of the socialist PASOK party and former trade union leader, said he was quitting because the measures were “painful for working people”, and accused Greece’s foreign lenders of blackmail.

Al Jazeera’s Paul Brennan, reporting from Brussels, said: “The fine print of this deal isn’t actually yet known.”

“It is up to the eurogroup to decide at the highest level if the conditions are in place to proceed with the second [bailout] programme,” Amadeu Altafaj Tardio, a spokesman for the European Commission, said.

Angry union leaders have announced a 48-hour general strike for Friday and Saturday.

Al Jazeera’s John Psaropoulos, reporting from Greek capital Athens, said: “It means legislators are going to be under direct pressure from the street outside the parliament tomorrow and Saturday, as they begin to debate the bill that they are supposed to vote into law on Sunday.”

“It will also mean that we are going to be reminded what the human cost is going to be of these austerity measures.

“It is also going to mean poorer families, poorer pensioners, poorer young people entering labour force, as there has been a 22 per cent cut in minimum wage. That’s a very severe burden for young people trying to build a carrier.”

Threat of bankruptcy

Financial analysts fear that could set off a chain reaction similar to the financial meltdown triggered by the collapse of US investment bank Lehman Brothers in the fall of 2008.

Mario Draghi, the president of the European Central Bank, confirmed the latest stage in the austerity talks, telling reporters at a press conference in Frankfurt, Germany that the Greek party leaders had accepted the terms of the deal.

The ECB is involved in the debt talks along with the EU and the IMF.

Al Jazeera’s Brennan said: “The European Central Bank chief has been non-committal about the terms of the deal that has apparently been reached by the troika and Greek lawmakers.

“He said that [ECB] will not take a mark down on Greek bonds. So, details are still up in the air.”

But several ministers arriving for the Brussels meeting warned there would not be a final decision at Thursday’s meeting.

“Greece has to implement what it has not implemented from the first programme before we can decide on a second,” Wolfgang Schaeuble, German finance minister, said.

Also attending the meeting in Brussels will be Christine Lagarde, the head of the International Monetary Fund, as well as Draghi.

The Greek finance minister Venizelos said his government also had an outline deal with private creditors on a bond swap in which they would give up some 70 per cent of the value of their Greek bond holdings, reducing Athens’ 350 billion euro debt pile by about 100 billion euros.

There is considerable resistance in Greece to further austerity. The country has endured two years of vicious spending cuts, the economy is in its fifth year of recession and unemployment is at a record 21 per cent rate.