Greek Parties Plan Talks on Cuts

Wall Street Journal
February 2, 2012

Greek Prime Minister Lucas Papademos has set crucial talks with leaders of the three parties backing his interim government to try to build a solid consensus for further cutbacks and reforms, a condition set by Greece's official lenders for further aid.

The International Monetary Fund and European Union have imposed the requirement that the country's political leaders commit fully to painful reforms ahead of new national elections expected later this year. Any voice of dissent from a major political party could derail the negotiations for a €130 billion rescue package from official and private-sector creditors.

From his part, Greece's finance minister Thursday piled pressure on the European Central Bank to participate—directly or indirectly—in the country's debt reduction efforts saying a deal couldn't be reached without its help.

Speaking to fellow Socialist deputies, Evangelos Venizelos, hinted that an agreement could be reached that would involve Europe's national central banks—rather than the ECB itself—as a way of circumventing ECB objections.

"Our goal is that the Greek debt reach 120% [of gross domestic product] in 2020," Mr. Venizelos said in a speech describing the ongoing talks with Greece's private-sector creditors, known as the PSI, or private-sector involvement.

"That requires, not only success of the PSI, but also completion of [official sector involvement]. That means the European Central Bank has to take part," he said. "We have to solve problems relating to Europe's central banks."

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