Greece's prime minister started a new round of negotiations today with representatives of the country's bailout creditors, who are demanding a fresh set of controversial austerity cuts to release the next batch of rescue loans the country desperately needs to stay afloat.
Antonis Samaras' meeting with officials from the so-called troika of the European Union, International Monetary Fund and European Central Bank comes a day ahead of his talks in Frankfurt with ECB president Mario Draghi.
Troika officials are "evaluating" Greece's proposals for the €11.5 billion austerity package for 2013-14, Finance Minister Yannis Stournaras said.
"It's a tough discussion, because the measures are tough," he told journalists after attending today's negotiations. Asked whether Greece's creditors are insisting on job cuts in the country's bloated, inefficient civil service, Stournaras only commented that: "We are trying to convince them that our arguments are correct."
In talks with Stournaras on Sunday, troika officials rejected part of the Greek proposals. That leaves Samaras battling on two fronts: He has to satisfy Greece's creditors — or lose the vital bailout funds. But he must also keep the peace with his center-left coalition partners, who publicly reject some of the cutbacks that will cause further widespread pain. Without their support, the government formed in late June would collapse, leaving the way open for the radical left main opposition to seize power. The opposition wants Greece to tear up its bailout commitments — even at risk of its leaving the euro.
Debt-crippled Greece has avoided bankruptcy by rescue loans from its European partners and the IMF since May 2010. As a necessary condition for the money to keep flowing, it has repeatedly cuts pensions and salaries, hiked taxes, watered down labor laws in benefit of employers and raised the retirement age, incurring deep resentment that led to a series of strikes and protests, many violent.
The bulk of the new unpopular savings — which have still to be approved by the two minority partners in Samaras' conservative-led coalition — are expected to come from pension and civil service pay cuts. Socialist PASOK and Democratic Left say they want to protect low-income Greeks from further pain, and rule out across the-board pension cuts.
A further sticking point is layoffs in the public sector, which employs about one in four Greeks and guarantees them jobs for life. At the same time, hundreds of thousands of jobs have been lost in the private sector, with more than 1.2 million people, or 24.4 percent of the workforce, out of a job in June.
Samaras will hold a new effort Wednesday to talk minority partners into backing the cutbacks. All three parties have pledged to respect Greece's bailout commitments, but seek easier terms, including a two-year extension in the deadline for the new cuts.
Stournaras said Monday there was no question of Athens delaying its presentation of the new cutbacks, expected later this week at an informal meeting of European finance ministers in Cyprus.
Troika inspectors are due this month to issue their assessment of Greece's efforts to reduce yawning budget deficits. A favorable report will allow the release of some €31 billion, the next rescue loan installment. Otherwise, Greece will lose its funding, default on its mountain of debt and probably be forced to leave the 17-member eurozone.
"It's clear that the troika must write a report at the end that truthfully lays out the situation in Greece, the degree of implementation of what's been promised, and that for this a close contact to and a lot of information from the Greek government are necessary," German government spokesman Steffen Seibert told journalists in Berlin.
Labor unions strongly oppose the new measures, with the main ADEDY civil servants' union saying Monday it planned to call a general strike "in the immediate future," together with the GSEE umbrella public sector union.
On Monday, university professors launched a two-day strike in the midst of the autumn exam period, while staff at technical universities will walk off the job all week. Academics say in some cases the new cuts will take more than 25 percent off their pay — which has already been reduced by 25 percent over the past two years.
State nursery and primary school teachers will be on strike on Wednesday, the second day of the school year, while secondary schoolteachers will also hold work stoppages. Tax collectors will be on strike on Thursday, while police and judges unions held protests last week.