Greek Austerity Deal Meets Resistance On Two Fronts

The main Greek party leaders agreed on Thursday to a last-minute deal on austerity, but the deal and new conditions imposed by Europe must still be approved by Parliament this weekend, and the third member of the governing coalition has made it clear he will not support the deal.

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Jean-Claude Juncker, prime minister of Luxembourg and head of the Eurogroup, said Thursday that, “despite the progress achieved over the last days,” the Eurogroup needed more assurances from Athens before a bailout could be paid out. “We did not yet have all necessary elements on the table to make decisions today,” he said.

Three major elements must still be resolved, Juncker said. The first is that Parliament approve the reform package this weekend. Secondly, Greece’s political leaders must pledge they will continue to implement the measures after elections in April. And finally, Greece must find a further 325 million euros in “structural expenditure” cuts for 2012.

“These three elements need to be in place before we can take decisions” about the bailout, said Juncker. “In short, there is no disbursement before implementation.”

The plan is due to be debated in the Greek parliament and voted upon on Sunday, but the leader of the third member of the coalition government, the right-wing LAOS party, told reporters on Friday that his party would vote against the proposal, despite having backed the measures a day earlier.

“I explained to the other political leaders that I cannot vote for this loan agreement,” LAOS leader George Karatzaferis told a news conference.

LOAS, the smallest member of the coalition, holds 16 seats in the 300-seat parliament. The PASOK party, with 153 seats in Parliament, and the New Democracy party, with 83, both support the measures, which are expected to include job and wage cuts, as well as pension reforms and other unpopular moves being protested today by strikers in Athens. The measures can still pass with without LAOS’s support.

Euro-zone finance ministers are due to meet next Wednesday, where they will sign the bailout agreement if they feel Greece has met all of their conditions. Greece needs to secure the bailouts funds to avoid a potential default on a 14.5 billion-euro bond redemption in March.

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