Greek general strike starts as EU presses govt

Greek trade union leaders called a general strike on Tuesday, as embattled Greek Prime Minister Lucas Papademos faced growing pressure from EU leaders to adopt tough new austerity measures. A key meeting with heads of the Greek socialist, conservative and far-right parties that form Papademos' unwieldy coalition was also expected to take place Tuesday, after the leaders failed to hold talks on Monday. Greek Finance Minister Evangelos Venizelos blamed the political parties for the failure to reach consensus on debt negotiations with the country's EU-IMF creditors. "Instead of looking at this tragic dilemma... with national unity... there are many who spend their effort on a conventional, outdated, party confrontation as if nothing has happened," the minister said. Around 5,000 people took part in protests called by the unions and left-wing parties late Monday against the austerity measures, despite Athens being hit by a torrential thunderstorm and strong winds. "It is a pretence that the measures are taken to forestall bankruptcy," Communist party leader Aleka Papariga told the gathering. "On the contrary, they will lead the people to misery to benefit the plutocracy and capital," she said. The country's two main unions called a 24-hour general strike for Tuesday to protest the new measures. The measures are a death sentence for the country, aimed at slashing salaries by 20-30 percent on top of previously imposed cuts, said Yiannis Panagopoulos, leader of the GSEE private-sector union. Papademos, being pulled one way by his EU partners and the other by domestic sentiment, was due to meet officials from the EU, European Central Bank (ECB) and International Monetary Fund (IMF) again on Monday evening. Those talks are aimed at wrapping up weeks of negotiations and saving his country from a historic default in March that could roil the 17-nation eurozone and undercut a global economic recovery. A new eurozone package worth 130 billion euros ($170 billion) in aid to Greece, pending since October, hangs in the balance. In Washington. the IMF's chief economist insisted that Greece must cut wages to boost competitiveness and pull the country out of its economic quagmire. "Either you basically increase productivity growth a lot and quickly, and you keep wage growth moderate, or you decrease wages," said Olivier Blanchard. In Paris, German Chancellor Angela Merkel and French President Nicolas Sarkozy ramped up the pressure on Athens. Merkel warned that Greece would receive no more EU aid to cope with the debt crisis until Athens reaches a deal with the EU, ECB and IMF 'troika' on more spending cuts and reforms. The two leaders also floated the idea of placing part of Greece's future bailout loan funds in a special account to make sure it is channelled to service the country's enormous debt, currently exceeding 350 billion euros, and not for other uses. "The Greeks gave us undertakings," Sarkozy added. "They should respect them scrupulously. There's no choice." A spokesman for EU commissioner Olli Rehn warned that Greece had already in effect missed the deadline to get the deal done by the coalition to reshape the economy and slash its debt in exchange for another bailout. But an EU diplomatic source suggested all was not lost. "We haven't lost all hope, we hope that between now and Wednesday evening, the negotiations will be wrapped up," the source told AFP, referring to public spending, as the massive write-down of privately-held debt appears all-but settled. Grouped within the Institute of International Finance (IIF), negotiators representing banks, insurance companies and private institutional investors held talks on Sunday on cutting some 100 billion euros from the roughly 200 billion in Greek government debt they hold. The EU source said that eurozone finance ministers have been asked to be on standby again for talks, probably via teleconference late Wednesday or Thursday. Papademos on Sunday managed to get limited agreement with his coalition partners on a state savings target of 1.5 percent of gross domestic product (GDP) that would include the implementation of reforms to lower production costs and a scheme to recapitalise Greek banks. And Administrative Reform Minister Dimitris Reppas confirmed that 15,000 civil service jobs would be axed this year as requested by EU-IMF creditors. Greece must pay 14.5 billion euros in bonds due March 20 to avoid default. Athens and its private creditors are under intense pressure from the "troika" to cut the country's total debt burden down to what is seen as a sustainable level of 120 percent of GDP in 2020 from 160 percent at present.