Thursday, February 2, 2012

Greek Debt Talks Progress, but Bailout Threatened by Budget Fight

New York Times
February 2, 2012

Private-sector creditors appeared to be inching closer to an agreement with Greece on Thursday to forgive much of the country’s debt. But it remained unclear whether political leaders in Athens could agree on wage cuts and other unpopular measures that would be a prerequisite to the release of any further bailout money.

Josef Ackermann, chairman of a banking group that is negotiating with Greece, said in Frankfurt on Thursday that an agreement with private bondholders was possible “in the next few days.”

“I don’t think we’re very far apart,” Mr. Ackermann, who is chief executive at Deutsche Bank, said at a news conference Thursday to present the bank’s quarterly earnings.

But in Athens, Lucas D. Papademos, the Greek prime minister, was struggling to get political parties to line up behind further budget cuts to make up a shortfall of €4.4 billion, or $5.8 billion.

His efforts were hampered by turmoil within the parties, including a challenge to the former prime minister, George A. Papandreou, from within his Pasok party, the largest in Parliament.

In a further possible complication, euro zone leaders are expected to ask the three parties in the governing coalition, which are gearing up for elections, to endorse the terms of a second bailout.

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