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An EU and a Greek flag fly in front of ancient Parthenon temple, in Athens,. (Petros Giannakouris/AP)
An EU and a Greek flag fly in front of ancient Parthenon temple, in Athens,. (Petros Giannakouris/AP)

Greek leaders agree on new cuts but not how they fall Add to ...

Greek political leaders broadly agree on an austerity package demanded by the country’s lenders but have yet to decide on how to soften its impact on low-wage earners and pensioners, government officials and party leaders said on Wednesday.

Greece is under pressure to drum up the nearly €12-billion ($15-billion U.S.) in cuts for the next two years to appease its lenders, the European Union and the International Monetary Fund, who have put the latest tranche of aid to avert a Greek bankruptcy on hold.

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The austerity package will be ready next week to be presented to the “troika” of inspectors from the EU, the IMF and the European Central Bank, Greece’s finance minister Yannis Stournaras said.

“There is political agreement on the package,” Mr. Stournaras said after leaders of the three parties in Greece’s ruling coalition huddled together to discuss the plan. “The package will be sealed next week and presented to the troika.”

He played down the issues holding up the package as “minor, technical” but Mr. Samaras’s leftist and Socialist allies – both under pressure from voters to oppose a new round of austerity – were more cautious on the work left to finalize the package.

Fotis Kouvelis, leader of the moderate Democratic Left party that campaigned on an anti-bailout but pro-euro platform, said he would reject any wholesale cuts to wages and pensions and that poor Greeks on already low salaries must be protected.

“We are trying to avert across-the-board cuts, which I categorically oppose,” Mr. Kouvelis said after the meeting. “Low-income earners must not bleed any further.”

Socialist leader Evangelos Venizelos said the party leaders would continue talks to ensure the cuts were “balanced and just” and did not “destroy the middle class”.

Previous austerity packages adopted since the country’s first EU/IMF bailout in 2010 have plunged Greece into a depression. Economic output is estimated to have shrunk by about a fifth over 2008-2012. Almost one in four Greeks and more than half of youth are jobless.

After weeks of harried discussions among various ministries to cobble together a plan for the cuts, Mr. Stournaras said late on Tuesday his ministry had readied the package.

The bulk of the plan consists of further cuts to pensions, public sector wages and health spending – which could trigger a new bout of street protests next month when Greeks return from the traditional August summer vacation.

Political leaders and government ministers have said in recent weeks that the cuts should only apply to those earning above a certain level, which has yet to be determined.

They are also trying to spare police and military personnel and other public sector workers from the cuts, as promised by party leaders before the June 17 election that brought the conservative-led coalition to power.

The “troika” is expected to return to Athens on Sept. 5. Their subsequent report on the country’s progress in meeting the terms of its bailout will determine whether EU leaders decide in October to continue funding Greece.

EU officials have already acknowledged the country is way off-track in meeting the terms of its bailout, but European leaders are eager to avoid letting it slide to a chaotic default and euro zone exit that drags down much bigger economies like Spain and Italy.

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