ATHENS — At an emergency meeting on Friday, the country’s political leaders failed to agree on new austerity measures proposed by the government, but Prime Minister George Papandreou said there was still hope that an agreement would be reached.
“Essentially, there are many points on which we can agree,” he said, speaking to the nation in a televised speech. “But there is a need for political will from all sides.”
“Over the next few days we will continue efforts to reach a consensus,” he continued, adding that “the government has assumed the responsibility to extract the country from the crisis and will do this with or without consensus.”
But leaders of the opposition parties have refused to fall in behind the president, Karolos Papoulias, who had called the meeting. The measures have been proposed by Mr. Papandreou’s Socialist government.
The aim of Friday’s meeting was to convince officials of theEuropean Union
and International Monetary Fund
is serious about repairing its finances, and has the political will to impose more tax increases and spending cuts on a public already weary after a year of belt-tightening. The effort came amid mounting speculation about the Greek government’s ability to avert a default, which would very likely lead to a new financial crisis across the euro
Olli Rehn, Europe’s commissioner for economic and monetary affairs, said in a statement that the commission “regrets the failure of Greek party leaders to reach consensus on economic adjustment to overcome the current debt crisis.”
“An agreement has to be found soon,” Mr. Rehn said. “Time is running out.”
Earlier in the day, Antonis Samaras, the leader of the country’s main conservative opposition party, New Democracy, said he would not back a program that would “raze Greece’s economy and destroy its society.”
He called for the renegotiation of the terms of an agreement with the union and the I.M.F., which last May pledged 110 billion euros in loans to Greece in exchange for the country’s getting its fiscal house in order.
Mr. Samaras also reiterated calls for an alternative approach to Greece’s finances, one that favored the lowering of taxes and faster privatization of state assets.
Other leaders also criticized the Socialists’ plan. Among them was the leader of the Communist Party, Aleka Papariga, who said Greeks were being subjected to “ideological terrorism” and should not give in to “coercive dilemmas.”
On Thursday, the head of the group of euro zone finance ministers, Jean-Claude Juncker, said again that the European Union would be unlikely to step in if the I.M.F. withheld its portion of a fifth installment of emergency funding to Greece — 12 billion euros ($17 billion) scheduled to be disbursed next month.
Greece’s lenders are demanding additional measures after the country missed its deficit-reduction target for 2010, putting the goals for this year and beyond further out of reach. A mission from the European Commission, the I.M.F. and the European Central Bank is currently compiling a much-anticipated report on the Greek government’s progress, after which European ministers will have to decide how to react.
The situation is difficult because public opinion in creditor countries is hardening and some euro zone governments, including that of the Netherlands, have made it clear that they will not step in and fill the funding gap if the I.M.F. does not believe that it can justify releasing its portion. That has increased pressure on the Greek government to agree to revenue-raising measures, including privatization, that will be sufficient to win over the I.M.F.
At the Group of 8 meeting in Deauville, France, on Friday, the United States expressed support for European efforts to prevent a renewed debt crisis in Greece from mushrooming into a larger problem for the euro monetary union, said two European diplomats who were present during the discussions but did not want to be named.
The Americans said that Europe’s ability to manage these problems was important to the United States, but that President Obama did not specify what kind of help the United States would be willing to extend, other than statements of support, the diplomats said.
The European leaders said during the discussions that Europe’s problems were limited to Greece and that they did not believe Greece risked infecting the rest of the euro zone, which covers 17 countries. They pointed to the continued strength of the euro vis-à-vis the dollar
as proof that the situation was still under control.
The leaders agreed, however, that Greece needed to be more aggressive in adjusting its own finances, and said they believed that the country would ultimately be able to avoid defaulting on or restructuring its debts.
Greek media has speculated in the last week that the country will hold snap elections or possibly return to the drachma. The European marine affairs commissioner, Maria Damanaki, who is a Greek Socialist, added fuel to the fire when she suggested on Wednesday that talks were already taking place about Greece’s possible exit from the euro zone.
Apart from tax increases and public spending cuts, the Greek government’s proposed austerity program also includes a privatization drive that foresees sales in stakes of state utilities and assets including the state telecommunications company OTE.
On Friday, Deutsche Telekom, which already has a 30 percent stake in OTE, confirmed the receipt of a letter from the Greek finance ministry asking to arrange talks to discuss increasing its stake.
But a few dozen employees of the phone company protested a further sell-off by blocking one of Athens’s busiest roads, in front of the company’s headquarters, during the morning rush hour Friday.
Larger protests have been held over the last three days as Greeks, facing a deepeningrecession
and mounting unemployment, seek to air their grievances.