November 23, 2011 / 2:06 PM / 8 years ago

Greek party leader offers bailout pledge, doubts remain

ATHENS (Reuters) - Conservative leader Antonis Samaras offered a written pledge to the EU and IMF Wednesday backing Greece’s bailout deal, but it was unclear whether his letter would be enough to satisfy the exasperated lenders and unblock funds to stave off bankruptcy.

Greek conservative party leader Antonis Samaras arrives at the presidential palace in Athens November 10, 2011. REUTERS/Yiorgos Karahalis

A vital sixth tranche of aid for the debt-choked country has been held up by his refusal to comply with a European Union demand for the written commitment supporting the bailout beyond the life of the current interim coalition government.

With Greece just weeks away from running out of cash, Samaras sent the letter to the EU and International Monetary Fund saying he supported new Prime Minister Lucas Papademos and the 130 billion euro (116 billion pound) bailout agreement.

However, he repeated his call for changing some economic policies demanded as a condition of the bailout, Greece’s second since last year. “We believe that certain policies have to be modified, so as to guarantee the programme’s success,” wrote Samaras, who heads the New Democracy party.

“This is more so, since according to the latest European economic forecasts, Greece in 2012 will be the only European country with five consecutive years in recession,” he added.

Wary of flip-flopping by Greece’s politicians, the EU and the IMF had asked party leaders for written commitments to back austerity policies before doling out the next round of funds.

Former prime minister George Papandreou’s Socialists and the far-right LAOS party have expressed their readiness to sign up. Samaras, who voted against the original 110-billion-euro bailout, has criticised the new rescue plan and demanded a change to the policy mix he says only deepens recession.

The lenders want to ensure that the country sticks to the terms of the agreement even after the coalition calls early elections, which have been pencilled in for February 19.

Finance Minister Evangelos Venizelos said earlier that he was hopeful for a quick resolution to an impasse which is also blocking the sixth, 8 billion euro instalment of Greece’s original bailout which the country desperately needs.

“I am very optimistic, I am certain that all political forces in the country will do immediately - I am certain within the day - all that must be done to unblock the (sixth tranche) procedure,” Venizelos told a parliamentary panel.

Underscoring Greece’s precarious situation while its politicians squabble, the central bank painted a dire picture of a country on the verge of being dragged back several decades without an “all-out effort” to save it.

The euro zone bailout deal agreed in late October may well be the “last such opportunity” given to Greece, it said.


“The present juncture is the most critical period in Greece’s post-war history,” the Bank of Greece said in an interim monetary policy report. “What is at stake is whether the country is to remain within the euro area.”

The central bank’s warning appeared directed squarely at the country’s politicians and it called on them to restore confidence in the nation.

Despite this stark warning, credit ratings agency Standard & Poor’s said it expected Greece to remain in the euro zone.

“Our base case scenario is that there will be the same membership of the euro zone in 12 months’ time,” the agency’s head of sovereign ratings, David Beers, said in Dublin. “The notion of Greece benefiting from leaving the euro zone is a completely misdirected notion.”

Economists have long warned that a euro zone exit would spell disaster for Greece and entail huge consequences for the rest of the currency bloc.

The initial trigger for the euro zone debt crisis, Greece is struggling through its fourth year of recession and growing public anger over relentless waves of austerity measures.

The central bank warned of more pain ahead, predicting the economy would not return to growth before 2013. Unemployment, nearing 17 percent this year, could rise further and top 18 percent next year, it said.

Papademos, a technocrat, has promised to implement reforms, but faces lukewarm support from major political parties and strident opposition from unions angered by a fresh round of austerity measures.

Wednesday, the government delivered a labour reform sought by lenders when it cut the number of occupations deemed “arduous.” This means hairdressers, hotel maids, taxi drivers and pastry chefs will no longer be able to retire early.

Fewer than 10 percent of Greece’s four million workforce will now be able to retire before reaching 65 years old.

Writing by Deepa Babington and Dina Kyriakidou Editing by Gareth Jones and Janet Lawrence

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