Tensions simmer as Greece, lenders battle over austerity

Thu Sep 20, 2012 6:12am EDT
 
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By Lefteris Papadimas and Deepa Babington

ATHENS (Reuters) - Greece's latest round of talks with lenders on an austerity plan was marked by moments of tension as the two sides squabbled over a plan to reform the country's bloated public sector, government officials told Reuters on Thursday.

The dispute is the latest challenge facing Prime Minister Antonis Samaras's government, which is struggling to reach agreement both internally and with the troika of European Union, European Central Bank and International Monetary Fund lenders on an unpopular package of spending cuts worth nearly 12 billion euros.

Government officials said the dispute erupted at a Wednesday evening meeting between the finance minister and senior troika officials, hours after Athens said the two sides had narrowed differences and were closing in on a deal. The troika's approval is essential for Athens to unlock further aid.

"There was tension at last night's meeting," a senior government official said.

"There is disagreement about the effectiveness of the measures on restructuring the public sector."

A second government official also said the talks were marked by tension over state sector reform but that the meeting concluded on a "smoother note" and that both sides remained in constant contact.

"The latest picture is much more smooth," the official said.

Earlier on Wednesday, Greece had raised hopes of a swift conclusion to the negotiations by saying the two sides had found agreement on measures worth 9.5 billion euros in the 11.7 billion euro package. The troika had initially rejected 4 billion euros in austerity cuts proposed by Athens, largely over contentious state sector reform and timid plans to fire civil servants.   Continued...

 
Greek Finance Minister Yannis Stournaras leaves after a meeting with Prime Minister Antonis Samaras at the Prime Minister's office in Athens September 20, 2012. Greece's latest round of talks with lenders on an austerity plan was marked by moments of tension as the two sides squabbled over a plan to reform the country's bloated public sector, government officials told Reuters on Thursday. REUTERS/John Kolesidis