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January 2012, Week 3

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Tue, 17 Jan 2012 20:47:18 -0500
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Striking Greeks Bring Transport to a Halt

    Anti-austerity actions hit Athens as country's lenders
    visit capital in bid to head off threat of debt default.

Ajezeera 
January 17, 2012

http://www.aljazeera.com/news/europe/2012/01/20121179481894410.html

Striking Greek workers have brought the Athens metro to a
standstill and kept ferries docked in protest against
austerity measures, as the country's lenders visited the
capital to try to avert a debt default.

Officials from the International Monetary Fund, the European
Union and the European Central Bank were in Athens on Tuesday
as part of efforts to put together a 130bn euro ($166bn)
rescue package that Greece needs to stay afloat when a major
bond redemption becomes due in late March.

Greeks have been hit hard by tax raises and wage cuts meant
 to put the Mediterranean nation's finances back on track
 with a first bailout agreed in 2010.

Greece has entered its fifth consecutive year of austerity-
fuelled recession, with unemployment reaching a record high
of 17.7 per cent.

No ferries left from Athens' main ports on Tuesday, buses
will only work part of the day, while bank employees are also
expected to walk off the job, and labour unions will stage
rallies to coincide with the start of the EU/IMF visit.

"We demand that austerity policies are abandoned and that the
legislation that crushes our labour and insurance rights and
turns workers into slaves is abolished," the EKA labour
union, which represents workers in Athens, said in a
statement.

The visit by the so-called troika of lenders is closely
linked with Athens' efforts to agree with banks on a deal to
slash its debt of more than 350bn euros by 100bn euros.

Recapitalise banks

Without the so-called PSI deal, which would see creditors
voluntarily giving up a lot of their promised returns, the EU
and IMF have cautioned that they will consider that Greece's
debt is not on a sustainable track and will not release
further aid.

The EU/IMF bailout plan would include money to recapitalise
Greek banks, which hold a big chunk of their country's debt.

One diplomat said: "If the PSI is successful you will need
 transfusion for the Greek banks, and for that you need money
 from the bailout plan."

Involving private sector investors in resolving Greece's debt
crisis poses a tough challenge but one that can be mastered,
said Ewald Nowotny, a member of the ECB governing council.

"This is indeed a very difficult operation. I hope that all
participants will understand the responsibility they have,"
he told a panel discussion on Tuesday, saying the Greek
government had to take the first steps to put its finances in
order.

But he added: "It is a problem that, with a cool head, can be
resolved."

Athens is running out of time and needs an agreement with
banks within days to avoid going bankrupt when 14.5bn euros
of bond redemptions fall due on March 20.

But talks broke down on Friday over the interest rate on new
bonds Greece will offer and a plan to enforce investor
losses.

Negotiations were suspended until Wednesday, and Athens sent
 senior officials to Washington to consult with the IMF.

Striking Greek workers have brought the Athens metro to a
standstill and kept ferries docked in protest against
austerity measures, as the country's lenders visited the
capital to try to avert a debt default.

Officials from the International Monetary Fund, the European
Union and the European Central Bank were in Athens on Tuesday
as part of efforts to put together a 130bn euro ($166bn)
rescue package that Greece needs to stay afloat when a major
bond redemption becomes due in late March.

Greeks have been hit hard by tax raises and wage cuts meant
to put the Mediterranean nation's finances back on track with
a first bailout agreed in 2010.

Greece has entered its fifth consecutive year of austerity-
fuelled recession, with unemployment reaching a record high
of 17.7 per cent.

No ferries left from Athens' main ports on Tuesday, buses
will only work part of the day, while bank employees are also
expected to walk off the job, and labour unions will stage
rallies to coincide with the start of the EU/IMF visit.

"We demand that austerity policies are abandoned and that the
legislation that crushes our labour and insurance rights and
turns workers into slaves is abolished," the EKA labour
union, which represents workers in Athens, said in a
statement.

The visit by the so-called troika of lenders is closely
linked with Athens' efforts to agree with banks on a deal to
slash its debt of more than 350bn euros by 100bn euros.

Recapitalise banks

Without the so-called PSI deal, which would see creditors
voluntarily giving up a lot of their promised returns, the EU
and IMF have cautioned that they will consider that Greece's
debt is not on a sustainable track and will not release
further aid.

The EU/IMF bailout plan would include money to recapitalise
Greek banks, which hold a big chunk of their country's debt.

One diplomat said: "If the PSI is successful you will need
transfusion for the Greek banks, and for that you need money
from the bailout plan."

Involving private sector investors in resolving Greece's debt
 crisis poses a tough challenge but one that can be mastered,
 said Ewald Nowotny, a member of the ECB governing council.

"This is indeed a very difficult operation. I hope that all
participants will understand the responsibility they have,"
he told a panel discussion on Tuesday, saying the Greek
government had to take the first steps to put its finances in
order.

But he added: "It is a problem that, with a cool head, can be
resolved."

Athens is running out of time and needs an agreement with
banks within days to avoid going bankrupt when 14.5bn euros
of bond redemptions fall due on March 20.

But talks broke down on Friday over the interest rate on new
 bonds Greece will offer and a plan to enforce investor
 losses.

Negotiations were suspended until Wednesday, and Athens sent
senior officials to Washington to consult with the IMF.

___________________________________________

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