Greece deal fails to convince, EU demands more

Thu Feb 9, 2012 6:48pm EST
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By Jan Strupczewski and Renee Maltezou

BRUSSELS/ATHENS (Reuters) - Greek political leaders said they had clinched a deal on economic reforms and spending cuts needed to secure a second bailout, but euro zone finance ministers demanded more measures and a parliamentary seal of approval before providing the aid.

The European Union and the International Monetary Fund have been exasperated by a string of broken promises and weeks of wrangling over the terms of a 130 billion euro ($172 billion) bailout, with time running out to avoid a default.

Finance ministers of the 17-nation euro zone meeting in Brussels warned there would be no immediate approval for the rescue package and said Athens must prove itself first.

Jean-Claude Juncker, who chairs the Eurogroup, set three conditions, saying the Greek parliament must ratify the package when it meets on Sunday and a further 325 million euros of spending reductions needed to be identified by next Wednesday, after which euro zone finance ministers would meet again.

"Thirdly, we would need to obtain strong political assurances from the leaders of the coalition parties on the implementation of the program," Juncker told a news conference after six hours of talks in Brussels. "Those elements needs to be in place before we can take decisions."

"In short, no disbursement before implementation."

Facing elections as soon as April, Greece's party leaders have been loath to accept the lenders' tough conditions, which are certain to be unpopular with increasingly angry voters.

Greek Finance Minister Evangelos Venizelos flew to Brussels after all-night talks involving Prime Minister Lucas Papademos, leaders of the three coalition parties and EU and IMF inspectors. He left the Brussels talks quickly, telling reporters Greece faced a choice of staying in the euro or leaving, Bloomberg reported.   Continued...

<p>Far-right leader George Karatzaferis (L), conservative party leader Antonis Samaras (2nd L), Prime Minister Lucas Papademos (C) and Socialist leader George Papandreou meet at the Prime Minister's office in Athens, February 8, 2012. REUTERS/Yiorgos Karahalis</p>