Prime Minister George Papandreou said on Tuesday an EU summit could turn the page on Greece's economic crisis, appealing for unity in his Socialist party to approve austerity measures.
European Union leaders will meet in Brussels on Wednesday to adopt a plan to reduce Greece's debt burden, fortify European banks and strengthen the euro zone's EFSF rescue fund to contain the spread of the euro zone's worsening debt crisis.

Papandreou said the deal, which could include a reduction of up to 60 percent in the value of Greece's more than 200 billion euro ($277 billion) debt, would help lessen the burden on ordinary Greeks.

"Tomorrow we want to be able to turn the page, so that we, as Europe and as a country, can move forward," Papandreou told Greek President Karolos Papoulias in a televised discussion before leaving for the summit.

"We have been fighting a great battle ... for these burdens and responsibilities to be shared, so that the Greek people can breathe and move forward with the country's rebirth," he said. "It takes a sense of calmness and unity from all parties."

Just 24 hours before the meeting, all eyes were on Rome rather than Athens after it failed on Monday to agree on raising the retirement age, one of the key economic reforms demanded by the EU to support its bonds.

Italy needs to issue some 600 billion euros in bonds in the next three years to refinance maturing debt.

Papandreou faces mounting opposition on the streets and from within his own party to any further austerity measures for a country where unemployment is at 16 percent in a fourth year of recession in Greece.

Powerful unions brought Greece to a standstill with a 48-hour strike last week as legislators approved the latest round of cuts to try to stave off bankruptcy, turning a central square outside parliament into a smoke-clogged battlefield.


Cutting the value of Greek bonds by 60 percent would have a dramatic impact on the country's banks and pension funds, which hold a large share of their assets in sovereign debt, estimated at more than 60 billion euros.

To try to calm fears that this could lead to pension cuts for the one-quarter of Greece's 11 million population which is retired, Finance Minister Evangelos Venizelos said on Tuesday that pension funds and banks would be recapitalized.

"We are answering the concerns of pensioners and those insured by the system," he said, noting that pension payments would not fall because of this.

Socialist legislators have said that last week's austerity package -- vital to securing access to an 8 billion euro tranche of EU/IMF funds needed to stave off default -- is the last round of belt tightening they would vote for.

Papandreou was forced to expel a senior MP and family friend for voting against parts of the bill, cutting his parliament majority to 153 deputies in the 300-seat house.

Many Socialist deputies have openly asked Papandreou to seek a multi-party government or require an enlarged majority of 180 votes for any further austerity measures, which would require opposition parties to commit to supporting them. The constitution provides for this in cases of national emergency.

However, the conservative New Democracy opposition party has made clear it will not support the government.

New Democracy spokesman Yannis Michelakis said the party would not vote to ratify the EU summit's decisions even if Socialists set a majority of 180 votes as a requirement.

"The government would use this either for political blackmail or as a means to escape," he said.

Failure to pass the package would almost inevitably lead to a snap election. New Democracy leads opinion polls but not by enough to win outright, meaning the only options would be a coalition government or repeat elections, with analysts saying both would be disruptive to fiscal and reform efforts.

($1 = 0.720 Euros)