In Greece, Bailout Talks Resume

Civil servants blockaded several ministries on Thursday to protest against austerity measures as Greece resumed talks with EU and IMF inspectors on an 8 billion euro aid tranche it needs to avoid bankruptcy next month.

The Socialist government decided on unpopular pension cuts, lay-offs and taxes last week to lure back the so-called troika of European Commission, European Central Bank and International Monetary Fund officials, who suspended talks earlier this month after disagreements on the steps needed to plug fiscal gaps.

Dozens of employees gathered in front of the finance ministry on Thursday in protest against the measures, shouting: "Take your bailout and leave."

They stopped some troika officials from entering the building, and the mission chiefs met Finance Minister Evangelos Venizelos in another government office.

"The climate was positive and creative after the tough measures that were decided," the finance ministry said in a statement after the talks resumed.

Civil servants also blocked the entrances of other public buildings including the interior, justice, health and agriculture ministries, a police spokesman said.

"These measures will not get us out of the crisis. I don't have enough money to pay for the extra taxes and levies," said taxi-driver George Kouris, 48, a father of two.

Before returning to the table, the EU/IMF mission demanded written assurances from Greece that its new pledges will be met, highlighting a lack of trust after repeated failures to meet targets and foot-dragging on privatizations.

Prime Minister George Papandreou, who urged his cabinet on Thursday to step up efforts to meet EU/IMF targets, will hold talks on Greece's debt situation with French President Nicolas Sarkozy in Paris on Friday.

"We are moving as fast as we can to finish pending issues and you should not allow issues in your area to linger," Papandreou admonished ministers.

In a sign of difficulties in implementing reforms, the cabinet postponed a decision on a measure announced last week to put 30,000 public sector workers on the road to redundancy.

"We must discuss the details with the troika," government spokesman Ilias Mosialos said.

Other officials said the government had drafted three alternative scenarios that would be discussed with inspectors before being finalized at a cabinet meeting on Sunday.

Athens has promised its EU and IMF lenders that it would put thousands of public sector workers in a so-called labor reserve this year, lifting a taboo on the sacking of civil servants to meet a condition for continued bailout aid.

But officials say enforcing the measure is very complicated in a country where the constitution protects civil servant jobs.


The EU, IMF and ECB inspectors are set to comb through new austerity plans for at least a week. Most analysts expect they will approve the next tranche of aid, although many expect Greece to have to default in the coming months.

Germany's parliament approved a strengthening of the euro zone's rescue fund in a key vote on Thursday despite growing doubts about Greece's solvency. German Finance Minister Wolfgang Schaeuble said euro zone finance ministers would decide on the aid payment on October 13.

"I think euro zone finance ministers will in the end release the next tranche of bailout payments for Greece," said Joerg Kraemer, economist at Commmerzbank. "They will not dare turn off the tap on Greece right now, it's a political decision."

Without new funds, Greece could run out of cash to pay state wage and pension bills as soon as October. A default on debt repayments could wreck the balance sheets of banks across Europe and unleash a crisis in the global financial system.

Bailing out Greece has become a tough political proposition for other euro zone leaders to sell to their own voters.

Papandreou's PASOK party trails the conservatives by 5.8 points, according to the latest opinion poll. The conservatives want a renegotiation of the bailout deal to allow lower taxes and less austerity, something the troika has rejected.

Labor unions have called new anti-austerity walkouts and protests that may shake the lawmakers' resolve to approve the rest of the measures, expected to come to a vote next month, after the property tax was backed by parliament on Tuesday, while police fired teargas at protesters outside..

Taxi owners who oppose the liberalization of their trade continued a 48-hour strike on Thursday. Hospital workers protesting at cuts walked off the job for three hours. Trade union ADEDY, which represents the country's 730,000 civil servants, called a rally and said it would march on parliament.

($1 = 0.735 Euros)