September 8, 2011
Greece's Socialist government is scrambling to cut public spending after receiving stark ultimatums from euro-zone governments that further rescue money will be withheld if Athens doesn't deliver on promises to reduce its budget deficit.
The government now is looking at unprecedented public-sector layoffs and cuts in civil-service perks, steps that could reshape Greek political culture by upending decades of cozy ties between the ruling Socialist party and a core constituency.
Pressure has been turned up on Greece after talks with visiting international inspectors were abruptly suspended last week when it was discovered that the country would overshoot the limit set on its budget deficit for this year. Inspectors demanded that Athens cover the gap before they approve the release of the next €8 billion ($11.2 billion) installment of its bailout program organized last year.
Senior European policy makers, including German Finance Minister Wolfgang Schäuble, warned this week that Greece won't get its next rescue-loan tranche unless the conditions attached to aid are fulfilled to the letter.
Without the aid, Greece is expected to run out of money within weeks, say senior Greek government officials.
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