Prime Minister Lucas Papademos said after lengthy talks in Brussels that Greece hopes to conclude negotiations with troika officials in Athens by the end of the week, although he admitted that there were still some “difficult issues” to resolve.
Speaking to journalists early on Tuesday morning after holding a second round of talks with European Unions officials once the leaders’ summit had concluded, Papademos refused to be drawn on the difficulties in the ongoing talks with the troika over a second bailout but hinted that labor costs were one of the issues still to be resolved.
“We aim to conclude talks with the troika by the end of the week,” he said
Greece’s lenders have asked for private sector wage cuts, which the political parties, unions and employers oppose. Papademos said that during the European Council meeting, he pointed out that Greece had regained over the last two years a third of the competitiveness it lost between 2000 and 2009 against other EU members. The prime minister said more steps were needed.
He added that there had been “significant parameters on the basic economic parameters” of the debt restructuring, or PSI, it is negotiating with bondholders.
Papademos said that if Greece secures the debt reduction and next bailout, this should be the last time it requires assistance from its partners.
“Our aim is to be in a position where we will not need any more funding from our lenders,” he said.
In her press conference, German Chancellor Angela Merkel had expressed concern about Greece’s debt sustainability and whether the haircut being negotiated with bondholders would be enough to rectify the problem.
“Greece’s debt sustainability is especially bad,” Merkel told reporters after the summit. “You have to find a way through more action by the Greek government, more contributions by private creditors, for example, in order to close this gap.”
The Greek prime minister said that in its conclusions, the European Council had asked for the “irrevocable” commitment of Greece’s political parties to the reform program. It was not clear if this would entail party leaders providing written commitment.
Papademos, however, expressed confidence about receiving the necessary support for the measures in Parliament.
After the EU council, Papademos met with Joerg Asmussen, an ECB executive board member, who has publicly opposed the ECB taking part in the private sector writedown of Greece's debt holdings.
Also at the meeting were Eurogroup Chairman Jean-Claude Juncker, EU Council President Herman Van Rompuy, European Commission President Jose Manuel Barroso, the European commissioner for economic and monetary affairs, Olli Rehn, and Greek Finance Minister Evangelos Venizelos.
Van Rompuy told reporters after the summit that the aim was to finalize a deal on a second package of support for Greece by the end of the week, so that all details are agreed by mid-February. Eurozone finance ministers next meet on February 12-13.
Papademos added in his press conference that there had been no discussion about German proposals for the EU to appoint a commissioner to oversee Greece’s budget with powers to intervene in fiscal policy.
Merkel also played down the German proposal. «Such supervision is only necessary if it is determined that a country does not stick to its agreements. That has not been the case with Portugal or with Ireland. But it is the case with Greece and that is why the need for such supervision arose. And so Greece is a special case,» said Merkel.
French President Nicolas Sarkozy indicated that the idea was a non-starter. He said that «step-by-step oversight is normal» but that appointing a commissioner with powers to interfere in Greece’s budget was not a possibility.
"Greece's recovery plan can be implemented only by the Greeks,» Sarkozy said. «No country can possibly be placed in guardianship. It would not be reasonable, democratic and efficient."
Sarkozy said Merkel had not backed the proposal.
Italian Prime Minister Mario Monti said that the idea of appointing a commissioner to oversee the Greek budget was not on the agenda during the EU leaders’ summit.
'I personally found the suggestion ... far fetched and unpleasant, but it certainly was not mentioned to heads of state and government,' said Monti.
The French President added that he expected Greece to conclude its debt restructuring negotiations with private bondholders very soon.
"The negotiations are moving forward in a good direction and we have high hopes that there will be an agreement in the coming days,» said Sarkozy.
"The problem of the negotiation in Greece is a problem between the private sector, perhaps other European institutions, and Greece,» he added.
Sarkozy added that leaders had «not taken a decision» on whether a special eurozone summit would be held to discuss issues relating just to Greece.