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Greek Leaders To Decide On Austerity Measures

by Joanna Kakissis

February 7, 2012

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[1 min 48 sec]

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February 7, 2012

Greek leaders are supposed to meet again Tuesday to finally sign off on more painful austerity measures in exchange for a new bailout. Greece needs more loans — and a separate debt-reduction deal — to avoid a messy default, which could lead to an exit from the eurozone.

(SOUNDBITE OF MUSIC)

RENEE MONTAGNE, HOST:

NPR's business news starts with more budget cuts in Greece.

Greece's leaders are expected to sign off, today, on more painful austerity measures – the price that country must pay for a new bailout.

STEVE INSKEEP, HOST:

The multi-billion dollar loans and a separate debt-reduction deal are needed to avoid a formal default, not to mention Greece's exit from the eurozone. They could lose the euro as their currency if they don't follow through on this.

Joanna Kakissis has the latest from Athens.

JOANNA KAKISSIS, BYLINE: The leaders of the three parties in a coalition government have been putting off this decision for days. The delay is threatening a separate bond-swap deal with private creditors to cut Greek debt by at least 50 percent. But politicians have two difficult choices: Accept the deal, which means angry voters at spring elections, or reject the deal and send Greece into a chaotic default when bond repayments come due next month.

The new bailout deal would give Greece close to $171 billion. But in exchange for that, the government must cut spending, recapitalize Greek banks and reduce the minimum wage by at least 20 percent.

Greeks strongly oppose the cuts. The minimum wage reduction prompted a general strike by unions today. Unions also oppose another measure, cutting 15,000 state jobs. Until the debt crisis, it was nearly impossible to lose a public sector job here, since the constitution protects state workers. Eurozone leaders are proposing more control over new bailout loans. Greek politicians, meanwhile, are hoping they won't lose control of an angry public.

For NPR News, I'm Joanna Kakissis in Athens.

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