(For more on the sovereign-debt crisis, see EXT4.)
Nov. 22 (Bloomberg) -- Luxembourg Prime Minister Jean- Claude Juncker set a one-week deadline for Antonis Samaras, head of Greece’s New Democracy party, to commit in writing to budget- cutting measures for the nation to get its next aid installment.
Samaras, whose party is a part of Greece’s unity government, has balked at a demand by the euro region and the International Monetary Fund for a written endorsement of budget cuts. Euro-area finance ministers, led by Juncker, intend to decide at a Nov. 29 meeting in Brussels whether Greece qualifies for an 8 billion-euro ($10.8 billion) loan payment under last year’s 110 billion-euro rescue.
“Would there be no cross-party agreement, the next disbursement would not take place,” Juncker told reporters today in Luxembourg after meeting with Greek Prime Minister Lucas Papademos. “I do think that from now until next Tuesday this will happen in a written way.”
Greece needs the sixth loan payment, as well as a planned second rescue package of 130 billion euros, to avoid economic collapse. The euro area and the IMF, which are funding the two packages, want Greece’s main political leaders including Samaras to commit to spending cuts beyond the life of the Papademos-led unity government.
European Commission President Jose Barroso yesterday told Samaras to stop playing “political games” and submit the written commitment. European Union President Herman Van Rompuy called on “all Greek political leaders to fully back” the austerity plan.
New Democracy spokesman Yannis Michelakis said today that the EU hadn’t sent a formal request for Samaras’s signature on a written pledge, the state-run Athens News Agency reported. Samaras has already taken five actions that show his full commitment to the austerity program, Michelakis said.
“We’ll have a written commitment by the Greek government before the next eurogroup,” Juncker said today. “I’m quite optimistic that we’ll be in a position from now until then to give a positive response as far as the sixth disbursement is concerned.”
Juncker said he has “full confidence in the new Greek prime minister to create a situation where this cross-party agreement would be and could be delivered.”
Papademos said his government “plans to take further action in the direction of introducing reforms” to bolster the Greek economy’s competitiveness. “The challenges ahead of us are formidable.”
Papademos, a former ECB vice president who took over when George Papandreou’s Socialist government collapsed on Nov. 10, meets with European Central Bank President Mario Draghi later today in Frankfurt.
“The situation is very demanding,” Van Rompuy said yesterday. “A lot of efforts have already been done by the Greek people. However, more needs to be done to restore stability, confidence and growth.”
George Karatzaferis, head of the LAOS party that is the third partner in the unity government, said he too was struggling with the demand for a written pledge on austerity and was considering sending an open letter in his group’s official newspaper.
“I ran into a wall on this issue,” Karatzaferis said in an interview on Mega TV yesterday when asked if he found any flexibility on the issue when he met EU, ECB and IMF officials in Athens recently. “I believe they have no trust in us at all.”
Papademos has vowed to press ahead with steps needed to win further aid while saying it was also up to Greek party chiefs like Samaras and Karatzaferis to meet the euro-area and IMF conditions for extra funding. Yesterday he defended the demand by international lenders for a written pledge to continued austerity.
--With assistance from Maria Petrakis in Athens and Jonathan Stearns in Brussels. Editors: Jones Hayden, Eddie Buckle
To contact the reporter on this story: Stephanie Bodoni in Luxembourg at firstname.lastname@example.org
To contact the editors responsible for this story: Anthony Aarons at email@example.com; James Hertling at firstname.lastname@example.org.