Greece: Political leaders reach agreement on harsh austerity measures

Greek political leaders, after several days of hesitation and delays, reached an agreement on the harsh austerity measures and reforms needed to secure a new package of international financial aid, but the country's partners reacted with skepticism.

Partners from the European Union and the International Monetary Fund were enraged by a series of broken deals and weeks of wrangling over the terms of a 130 billion euro bailout as time ran out to avoid a chaotic bankruptcy, Reuters said.

Eurozone finance ministers warned that there would be no immediate green light for a rescue package and stressed that Athens must first prove itself.

"It is up to the Greek government to implement concrete actions through legal measures and other actions to convince European partners that the second program could work," said Olli Rehn, European Commissioner for Monetary and Economic Affairs.

The measures will mean a big drop in living standards for many Greeks who are already facing a deep recession for the fifth year

The Greek government's marathon negotiations ended with the acceptance of 15.000 state sector job cuts and wage cuts in exchange for financial aid without which Athens threatens to become insolvent on March 20, when 14,5 billion euros of government bonds come due.

The measures will mean a big drop in living standards for many Greeks who are already facing a deep recession for the fifth year.

Deputy Minister of Labor Janis Kutsukos resigned with the explanation that the package will be "painful for workers".

Greece's two main unions have called for a 48-hour strike for today and tomorrow against the reforms.

Deputy Minister of Labor Kutsukos resigned with the explanation that the package will be "painful for workers"

"Painful measures that create misery for the young, unemployed and pensioners do not leave us much room," said the general secretary of one of the trade unions, Ilias Iliopoulos.

"We will not accept that. There will be a social revolt."

President of the European Central Bank, Mario Draghi, opened the door for indirect aid to Athens yesterday.

Greece is asking the ECB to pay back profits on Greek bonds it holds - a move that could raise 12 billion euros or more to help plug a gap in its financing needs, Reuters reported.

The Greek government's marathon negotiations have ended with the government agreeing to cut 15.000 public sector jobs and pay cuts in exchange for financial aid to the government.

At the very end of the one-hour conference, Draghi hinted that banks could pass on their profits from Greek bonds to eurozone countries, which could then transfer money to Greece. The ECB is prohibited from financing governments directly.

The austerity plan, along with a voluntary write-down of Greek bonds with private creditors and an ECB bailout, aims to reduce Athens' debt from 160 percent of GDP to 120 percent by 2020.

Dragi said that an agreement with the private sector had been reached.

Gallery