Meeting setback adds fresh hurdle to Greece bailout

Two steps forward, one step back. So goes the frenzied effort across Europe to bail out Greece and save it from a potentially devastating default on its debts.

A meeting of the finance chiefs of the 17 euro countries to discuss Greece's second multibillion bailout planned for today was called off yesterday after Athens failed to deliver in time on several demands made by its partners in the currency union.

The last-minute cancellation of the meeting shows the eurozone wants much tougher guarantees now from Athens before giving it an extra €130 billion ($204.3 billion) in rescue loans, on top of €110 billion granted in 2010, raising fears that the complex deal could still fall apart.

Today's meeting was expected to give the green light for a bond-swap deal with private creditors designed to slice about €100 billion off Greece's debt. The swap deal, which will take several weeks to implement, has to be finalised by March 20, when Greece faces a €14.5 billion bond redemption that it cannot pay.

Athens and the eurozone have spent much of the past two years working to avoid a default, but the measures demanded in return for the second bailout cut to the bone of Greece's society and state, making it hard to see how the nation can restore growth.

"Greece has made all the efforts that it needed to do, and the people cannot take any more," Greece's Public Order Minister Christos Papoutsis said after a Cabinet meeting.

"It has appeared that further technical work between Greece and the troika is needed in a number of areas," Jean-Claude Juncker, the Prime Minister of Luxembourg, who also chairs the meetings of eurozone finance ministers, said in calling off today's meeting.

A report due from Greece's international debt inspectors from the European Commission, European Central Bank and International Monetary Fund - known as the "troika" - will be key to determining whether measures by Greece and the rest of Europe will suffice to allow it to carry its debts and get further aid.

While the Parliament in Athens faced down violent protests over the weekend to approve a far-reaching new austerity package, the cabinet of ministers spent hours yesterday discussing how to save an extra €325 million demanded last week by the eurozone.

The other finance ministers also want assurances from the leaders of Greece's two main political parties that they will implement the promised spending cuts and reforms after national elections expected for April. A Greek Government official said letters from the party leaders promising implementation of the measures would be ready by today. He said the final details for saving €325 million would also be decided today, after suggestions had been discussed with debt inspectors from the EU and the IMF.

But Juncker said neither of these demands had been met in time for the finance ministers' meeting to go ahead.

Instead, the ministers will speak in a teleconference today and plan to meet in person on Monday in Brussels.

- AP