Greece braces for political overhaul

also feared to bring greater supervision from Brussels and force a political overhaul.
“Dramatic haggling over haircut,” headlined the country’s top-selling Ta Nea daily while leftist Eleftherotypia daily spoke of a tug-of-war with bankruptcy amid crunch talks with bankers pressed to accept a major Greek debt reduction.

“All is open until the last minute,” said Kathimerini daily.
The paper reported that Finance Minister Evangelos Venizelos had presented Greek bankers with a plan for a 50-percent writedown of state debt with cash payments as the main incentive.
For every 100 euros of Greek debt, private investors would be given 15 euros in cash and 35 euros in 30-year-bonds with a six-percent voucher, although the ratio of cash and bonds could change, the daily said, citing unnamed sources in Brussels.

European leaders were scheduled to announce in Brussels yesterday a plan to boost confidence in the eurozone after months of indecision and uncertainty.
The EU is trying to prevent a full-blown Greek default and limit contagion within the eurozone after Ireland and Portugal also required bailouts and Italy begins to look vulnerable.
A source close to the negotiations told AFP that the EU had asked banks to agree a 60 percent write-down on their Greek debt holdings.

An earlier EU plan in July only called for a 21 percent cut in Greek debt held by private creditors, who were to exchange maturing Greek government bonds with longer-term instruments.
But there is speculation in Athens that the new deal will include increased governance from Brussels to ensure make-or-break reforms agreed last year are applied in full.

“There will be no issue of having (EU) commissioners in Greek ministries,” government spokesman Elias Mossialos told Ta Nea while another official said such a move could spark minister resignations.
Greek Prime Minister George Papandreou has suggested that wider approval in Athens will be sought in a parliamentary vote on any new EU deal.

“All those in positions of responsibility – political leaderships and parties – must contribute in applying these decisions,” Papandreou said after a meeting with President Carolos Papoulias on Tuesday.
Past requests for unity by the prime minister have fallen on deaf ears, with the main opposition conservatives demanding early elections instead.

Finance Minister Venizelos on Monday said it would be a “national imperative” for parliament to approve the EU deal with a “broad majority” if possible.
Under the constitution, an agreement deemed of major national interest must be approved by 180 out of 300 deputies.

The government majority is 27 lawmakers short of that and given the opposition’s refusal to help so far, insistence on this point could bring early elections, analysts note.
Greek bankers have also expressed concern on the impact of a greater debt writedown imposed the country’s lenders, which have been unable to raise new capital on markets for months owing to the country’s near-default rating.

Unions have also warned of negative repercussions for Greece’s troubled pension funds which also have extensive state debt holdings. – AFP.