Samaras Gets New Rebuff From Coalition on Greek Budget Cuts

Greek Prime Minister Antonis Samaras failed in a fresh bid to clinch agreement from his coalition on an 11.5 billion-euro ($14.9 billion) budget cuts package that’s key to releasing international aid funds.

Samaras received the third refusal in less than two weeks from Democratic Left leader Fotis Kouvelis after talks with Pasok leader Evangelos Venizelos in Athens about a plan that has already been criticized by inspectors from the European Commission, the European Central Bank and the International Monetary Fund -- the so-called troika -- as not going far enough.

“The troika must stop attacking Greek society,” said Kouvelis, whose party is one of the three in Samaras’s coalition. “The troika must understand there are limits.”

The standoff leaves Samaras heading to a meeting in Rome tomorrow with his Italian, Spanish and Irish counterparts without any final political commitment on the package he has said is necessary to restore Greece’s credibility and keep the country in the euro.

Finance Minister Yannis Stournaras told reporters he was hopeful of an agreement “soon” and that talks were difficult. He’s due to meet with the troika again today, in a bid to identify the 2.5 billion euros in savings that have yet to be agreed with the international lenders.

Kouvelis said there was no final agreement on any measures. A new meeting of the coalition party leaders will be held next week, he said.

Gains Erased

The Athens stock exchange erased gains of as much as 3.8 percent after Kouvelis’s statement, with the benchmark general index adding 0.9 percent to 759.12 at 4:45 p.m.

With the New Democracy party holding 128 of the Greek Parliament’s 300 seats, Samaras relies on Pasok’s 33 seats and Democratic Left’s 17 to secure parliamentary approval of any pledge made to international lenders.

Opposition to the cuts to disability benefits, wages and pensions is escalating in Greece that’s in a fifth year of recession and where almost a quarter of the workforce is unemployed. All public transit workers walked off the job today, affecting subway, bus and train services.

Police and fire officers rallied outside the premier’s residence during the meeting to oppose backtracking by Samaras on pledges to save their wages from cuts. Greece’s two biggest unions plan to hold a 24-hour general strike on Sept. 26.

Recapitalize Banks

Agreement on the package from Greek political leaders and the troika is imperative to allow the release of a 31 billion- euro payment that will mainly go to recapitalize the nation’s banks and boost liquidity in a cash-starved economy.

Samaras is facing opposition from Venizelos and Kouvelis on across-the-board cuts to pensions and wages, demands to fire civil servants, further changes to labor laws and a possible increase in the retirement age to 67.

Venizelos told reporters after the meeting that 8 billion euros of measures agreed so far with the troika related to wages, pensions and benefits. That, he said, is “excessive” and would have to be reduced.

He called for a “total” package to be presented to parliament including a condition that underpins the formation of the coalition government: that austerity measures be spread over four years rather than two.

Lenders to Greece held back funds pledged under two rescue packages totaling 240 billion euros in the wake of elections in May and June, which derailed reforms, halted state-asset sales and stoked concerns about the nation’s future in the 17-nation euro.

European leaders have told Samaras the country must show it is implementing commitments made earlier this year to secure a second rescue package before there can be any discussion on easing the terms of the program.

To contact the reporters on this story: Eleni Chrepa in Athens at echrepa@bloomberg.net; Marcus Bensasson in Athens at mbensasson@bloomberg.net

To contact the editor responsible for this story: Stephen Foxwell at sfoxwell@bloomberg.net

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