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Greek party leader resists pressure on pledge

Parties in Lucas Papademos' unity govt meeting troika representatives
Parties in Lucas Papademos' unity govt meeting troika representatives

Greece's creditors have failed to persuade the leader of the main conservative party to sign a pledge saying he would back austerity measures under the country’s second bailout deal.

Leader of the New Democracy party Antonis Samaras, one of three parties in a new national unity coalition, said there was no need to provide a written guarantee because his word can be trusted.

However international lenders, weary of Greece's failure to deliver on fiscal targets during two years of financial crisis, have insisted on the written statement.

They fear the country’s politicians may otherwise try to wriggle out of their commitments, especially with an election likely in February.

Representatives of the European Commission, the European Central Bank and the International Monetary Fund discussed the issue with Mr Samaras in Athens today.

"Regarding the discussion we had with the troika and specifically on the written reassurances, I repeated to them my position on the issue," he told reporters after the talks.

Mr Samaras, a Harvard-educated economist known for his fiery rhetoric, said New Democracy had proven its commitment to the terms of the bailout by backing the coalition led by technocrat Prime Minister Lucas Papademos and its new budget.

Mr Papademos's coalition, which comprises New Democracy, the Socialists of fallen premier George Papandreou and the small far-right LAOS party, won a parliamentary vote of confidence on Wednesday and submitted a draft budget to parliament yesterday.

Mr Samaras's stance potentially puts at risk the next aid tranche for Greece worth €8bn that it needs by mid-December to meet debt repayments. Failure would mean default.

The new bailout negotiated last month envisages a further €130bn meant to keep the Mediterranean country of 11 million people financed until 2014.

Political analysts said they expected some face-saving compromise would be found to end the standoff.

The troika also met Mr Papandreou, but he and his party made no immediate comment after the talks. The leader of LAOS is due to meet the EU and IMF officials tomorrow.

Mr Samaras agreed to back Mr Papademos's coalition in return for early elections that opinion polls suggest he would win, albeit without a majority.

In recent days, he has stressed that his support for the cabinet is temporary, pending a February poll.

Support for both Mr Papandreou's PASOK and Mr Samaras's New Democracy, which have dominated Greek politics for decades, has eroded over the past week, opinion polls show.

However, more than two thirds of voters back Mr Papademos, a former central banker who is the sole technocrat in a coalition otherwise made up of party politicians.

Greece's debt troubles over the past two years have turned into a major European crisis that threatens the survival of the euro and the stability of the global economy.

As Greek politicians bickered this week, borrowing costs for much larger eurozone countries, such as Italy and Spain, were in the danger zone and even France's rose.

The new cabinet's draft budget, expected to be approved in the next few weeks, predicts a fifth year of recession but says a plan to convince Greece's private creditors to take a 50% loss on bond holdings could cut the budget deficit by more than a third.

A New Democracy official said the troika also discussed the debt swap plan with Mr Samaras today.