Greece Sets Austerity Plan

Wall Street Journal
February 10, 2012

Greece's political leaders agreed on unpopular budget, wage and pension cuts that moved Europe to the verge of approving a new bailout to stave off a messy Greek debt default. But euro-zone finance ministers meeting here late Thursday demanded the measures pass the Greek Parliament before they would finally sign off on the deal.

The demands from the finance ministers set the stage for further uncertainty over the long-awaited bailout and debt-restructuring package for Greece. The focus on Sunday will shift to the Greek Parliament, where the euro zone is insisting the program be agreed upon. "In short, no disbursement [of aid] without implementation," said Jean-Claude Juncker, the Luxembourg prime minister who serves as chairman of the ministers' meeting.

The ministers coupled their demand for Parliamentary action with an insistence that the political leaders of the coalition sign a written pledge to back the program—in an effort to bind political leaders after elections expected as soon as April—and to identify exactly from where €325 million ($431 million) out of more than €3 billion in promised budget cuts this year will come. Mr. Juncker confidently predicted: "The Greek Parliament will not reject the program."

Evangelos Venizelos, the Greek finance minister, put the choice facing Greece in stark terms: "If we see our future and the salvation of the country in the euro zone, in Europe, we must do what we must do in order for the program to definitely be approved…. If our country, our people prefer another political decision that necessarily leads out of the euro zone and therefore outside European integration, we have to say this clearly to ourselves and to our compatriots."

The demands underline the erosion of trust between Greece and its creditors in the euro zone. A further meeting of euro-zone ministers is scheduled for Wednesday to finally sign off on the agreement, assuming the package passes Parliament.

European officials said Mr. Venizelos was criticized harshly by many other ministers, in part because of the way negotiations dragged on to the last minute.

More