Talks on Greek Bailout Hang in Balance

ATHENS, Greece (AP) — Parties backing Greece's coalition government will hold a second day of emergency talks Monday on an austerity deal with rescue creditors, after an intense weekend of negotiations failed to produce a breakthrough needed to avert bankruptcy in March.

Prime Minister Lucas Papademos will meet with negotiators from the eurozone and the International Monetary Fund in the afternoon and then with the leaders of the three parties backing his coalition.

The parties all publicly oppose steep cuts in private sector pay demanded by the eurozone and IMF.

The new euro130 billion ($171 billion) bailout deal is vital for Greece to avoid bankruptcy next month as it cannot cover a euro14.5 billion ($19.1 billion) bond repayment due March 20 without the rescue funds.

The debt-crippled country has been kept solvent since May 2010 by payments from a euro110 billion ($145 billion) international rescue loan package. When it became clear the money would not be enough, a second bailout was decided last October.

Its implementation depends on Greece's progress in separate talks with banks and other private bondholders to forgive euro100 billion ($131.6 billion) in Greek debt, in exchange for a cash payment and new bonds with more lenient repayment terms.

Over the weekend, Greek officials held a conference call with eurozone finance ministers, as well as exhaustive rounds of talks in Athens with EU-IMF debt inspectors, senior bank negotiators, and Greek political party leaders, to try and hammer out a deal on the new cutbacks.

Greeks have already been subjected to a spate of austerity measures in return for the rescue loans, suffering significant cuts in pensions and salaries coupled with repeated tax hikes and an increase in retirement ages.

Angry at the prospect of new pain after two years of harsh austerity, Greece's main GSEE labor union and the ADEDY civil servants' union called a new general strike for Tuesday.