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Eurozone crisis live: Greek bailout deal threatened by €300m pension cuts row

Leaders fail to agree pension cuts
€3bn savings agreed at marathon talks
Greek finance minister heads to Brussels with ‘hope’

8.24am: George Karatzaferis, the junior partner in the coalition, initially declared that he opposed the agreement, only to later clarify that he would continue to support the coalition government

Greek news website ekathimerini.com reports:

Leaving the Maximos Mansion, Karatzaferis quoted a poem by Constantine P. Cavafy, suggesting that he had rejected the deal.

On returning to his party’s headquarters, he clarified that he objected to signing the agreement because he did not have enough time to study it.

Despite having it translated into Greek especially?

Karatzaferis’s comments have caused some bemusement in Greece, with Athenian Diane Shugart pointing out that you either back the deal, or you don’t.

ps someone should tell mr karatzaferis that agreeing albeit with serious reservations is like being a little pregnant #greece

— Diane Shugart (@dianalizia) February 9, 2012

Sony Kapoor, managing director of the Re-Define think tank, also isn’t impressed with the comments coming out of Athens:

Methinks there is a lot of posturing re #Greek deal, primarily for domestic audiences in #Greece & #Germany

— Sony Kapoor (@SonyKapoor) February 9, 2012

8.18am: Greek finance minister Evangelos Venizelos struck an optimistic tone as he headed to Brussels to present the results of last night’s talks to the Eurogroup (made up of the 17 finance ministers from countries within the euro).

Venizelos said:

I leave for Brussels with hope that the Eurogroup will take a positive decision concerning the new aid plan.

As the prime minister said, there is agreement on all the issues bar one.

Christine Lagarde of the International Monetary Fund will also attend this afternoon’s meeting in Brussels.

Gary Jenkins, City analyst at Evolution Securities, suggests that Greece may be hoping that the EU decides to let them off the last €300m. Possibly, but on the other hand Athens’s ‘goodwill bucket’ is running pretty dry.

Jenkins also questioned whether the agreement could actually be implemented:

Whether an agreement will survive the April election, let alone the years of economic hardship to come, is a moot point. Apparently the terms of the agreement are based upon (amongst many other things) Greece returning to economic growth in the first half of 2013, which may be a tad optimistic.

7.57am: Prime minister Lucas Papademos held talks with Greece’s Troika of lenders (the IMF, the ECB and the EU) overnight after the talks with Papandreou, Samaras and Karatzaferis broke up.

Reuters is reporting that Greece has been given another two weeks to find €300m in alternative savings, if the pensions issue really cannot be resolved. According to an unnamed official:

Greece has another 15 days to specify fiscal savings worth 300 million euros.

7.44am: On a positive note, plenty of progress was made at last night’s talks, which lasted over seven hours.

George Papandreou (head of PASOK – socialist), Antonis Samaras (New Democracy – right wing) and George Karatzaferis (Laos – far right) agreed to around €3bn of austerity measures. That includes hefty cuts to the minimum wage, and up to 15,000 job cuts across the civil service.

Pensions, though, remained the sticking point, leaving technocratic PM Lucas Papademos around €300m shy of his target of €3.3bn of savings for 2012.

With elections looming, it appears that no-one wanted to be seen as reponsible for cutting money to the elderly. It appears that New Democracy would not accept cuts to supplementary state pensions, while Pasok would not accept cuts to the primary pension.

Samaras declared last night that he did not have the right “not to negotiate hard” for Greek pensioners:

During these difficult times, we must look at ordinary people, at the pensioner.

Panos Beglitis, a spokesman for the Pasok socialist party, told journalists in Athens that his party were also opposed to cuts in main pensions. He added that the three leaders had accepted that the minimum wage would drop by 22%.

7.30am: Good morning, and welcome to our rolling coverage of the eurozone crisis.

Overnight, Greece’s leaders have failed to agree to the full terms of its £130bn bailout package. Despite negotiating until nearly dawn, the coalition government headed by Lucas Papademos could not agree the details of cuts to pensions.

This leaves Greece short of around €300m of savings needed to persuade its international lenders to approve its second rescue deal.

Despite the hitch, the full Greek cabinet is due to meet later today to decide whether to rubber-stamp the new austerity programme. Evangelos Venizelos, the Greek finance minister, is heading to Brussels to present it to finance ministers from across the eurozone

But with €300m still to find, will Venizelos get a warm welcome from the eurogroup?

It’s going to be a busy day. Both the Bank of England and the European Central Bank will announce their latest monetary policy decisions this lunchtime — Britain could get more quantitative easing, while ECB chair Mario Draghi will be quizzed on the euro crisis.

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