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FACTDROP: Greece’s Samaras Urged by EU to Back Deficit Cuts in Writing


Greece’s Samaras Urged by EU to Back Deficit Cuts in Writing

Πηγή: Bloomberg
By Jonathan Stearns
Nov 21 2011

Nov. 21 (Bloomberg) -- Antonis Samaras, head of Greece’s New Democracy party, faced growing European Union demands to pledge written support for Greek budget cuts as a condition for the next installment of international aid to the country.

“We need to see a country united,” Jose Barroso, president of the European Commission, the EU’s executive arm, said at a press conference today in Brussels with Greek Prime Minister Lucas Papademos. “The issue of trust, of confidence, is critically important.”

Samaras, whose party is a member of Greece’s unity government, has balked at the demand for a written endorsement of budget cuts, telling officials from the EU, the International Monetary Fund and the European Central Bank that he has already taken five actions that show his full commitment to the austerity program, state-run Athens News Agency said on Nov. 19.

Greece needs a sixth disbursement of loans under last year’s 110 billion-euro ($148 billion) rescue and a planned second international aid package of 130 billion euros to avoid economic collapse. The euro area and IMF, which are funding the two packages including the next payment of 8 billion euros, want Greece’s main political leaders including Samaras to commit to spending cuts beyond the life of the Papademos-led unity government.

‘Very Demanding’

EU President Herman Van Rompuy called on “all Greek political leaders to fully back this strategy.” In a statement after meeting Papademos today, Van Rompuy said euro-area finance ministers “should” be in a position to authorize the next Greek loan installment at a meeting scheduled for Nov. 29.

“The situation is very demanding,” Van Rompuy said. “A lot of efforts have already been done by the Greek people. However, more needs to be done to restore stability, confidence and growth.”

Barroso said Greece faces “exceptional” difficulties that don’t allow for “political games” by Greek party leaders. He said the aim is to ensure that Greece stays in the 17-nation euro area.

“For the European Union and IMF to support, they need to be sure that this is for a sustainable effort, that it’s not just for tomorrow,” Barroso said. “What we have to do now is to concentrate on implementation -- less politics and more commitment. It’s not just a sprint; it’s a marathon.”

International Lenders

Papademos, a former ECB vice president, vowed to press ahead with steps needed to win further aid while saying it was also up to Greek party chiefs like Samaras to meet the euro-area and IMF conditions for extra funding. He defended the demand by international lenders for a written commitment to continued austerity.

“It is necessary in order to eliminate uncertainties and ambiguities concerning actions to be taken in the future by parties that may be in power,” Papademos said. “But it’s up to the leaders of the relevant parties to decide how this confirmation of the commitment will be made.”

He took over the premier’s job this month from Socialist leader George Papandreou, who stepped down after being rebuked by Germany and France for announcing plans -- later revoked -- for a referendum on the second bailout. German Chancellor Angela Merkel and French President Nicolas Sarkozy said any Greek referendum would have to be a yes-or-no vote on Greece’s membership of the euro area.

In his remarks today with Barroso, Papademos said Greece needs to keep the euro. This goal is supported by “the overwhelming majority of the Greek people,” he said.

‘Herculean One’

“This is the only route forward, the only option for this government and for the Greek people,” Papademos said. “The task ahead of us is a Herculean one.”

He also vowed to enact a voluntary writedown of Greek debt with private investors, as foreseen in the second aid package for Greece approved by euro-area leaders on Oct. 26-27. That bond exchange foresees 50 percent losses for investors and is supposed to take place in early 2012.

“It’s a complex process, but we are committed to complete it successfully together with the private sector and our European partners,” Papademos said.

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