Greek unions strike before leaders' talks

GREEK party leaders were to face crunch talks yesterday to secure a new international bailout and avoid a chaotic debt default, caught between EU demands that they accept painful reforms now and a national strike against more austerity.!

Prime Minister Lucas Papademos negotiated through most of the night with Greece's European Union and IMF lenders, ending at 4 am (0200 GMT) when the 24-hour strike was about to begin, closing ports and tourist sites and disrupting public transport.!

Papademos, a technocrat parachuted in to lead the Greek government late last year, must persuade leaders of the three parties in his coalition government to accept the EU/IMF conditions for the €130 billion (US$170 billion) rescue.!

"We must find a solution today," said a government official before the leaders' talks, which will start later in the day.!

Another official said the government was preparing a text to put to the leaders for their approval, suggesting some movement in the process.!

With Greece's future in the euro zone in question, German Chancellor Angela Merkel said time was of the essence and there are growing signs that euro zone officials have lost patience.!

They say the full package must be agreed with Greece and approved by the euro zone, European Central Bank and International Monetary Fund before Feb 15. !

This is to allow time for complex legal procedures involved in a bond swap deal under which the value of private investors' holdings of Greek debt will be cut radically in value so Athens can get rescue funds before March 20 when it has to meet heavy debt repayments or suffer a chaotic default.!

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Merkel told Athens on Monday to make up its mind fast if it would accept the deal, and its conditions of reforms to make the Greek economy more competitive that are certain to lead to big cuts in living standards.!

Finance Minister Evangelos Venizelos said talks with the "troika" of lenders the European Commission, ECB and IMF were not going well.

"Unfortunately the negotiations are so tough that as soon as one chapter closes, another opens," he said after meeting troika officials on Monday night.!

But a source close to the negotiations said that despite the complexity of the talks, especially on very unpopular labour reforms, Greece and its lenders were making progress.!

"We are not as far from each other as we were before," the official said, adding the two parties were working to finalise the outline of the "memorandum of understanding ", or policy programme Greece needs to agree to in order to get the bailout.!

Reuters