Greece rejigs reforms as clock ticks on loan deal

Athens (AFP) - Greece raced Sunday to finalise reform proposals that would keep its loan lifeline open under an EU debt deal that saw its anti-austerity ambitions curtailed.

European finance ministers on Friday gave Athens until Monday to present proposals that would convince its creditors to grant a four-month extension of its debt bailout.

A top government official on Sunday said Athens would submit proposals that will take the struggling Greek economy "out of sedation."

"We are compiling a list of measures to make the Greek civil service more effective and to combat tax evasion," minister of state Nikos Pappas told Mega channel.

The four-month extension is designed to enable Greece and its creditors to negotiate a new reform deal acceptable to both sides.

Greece's hard-left Syriza government is walking a tightrope between its commitments to European creditors and its electoral pledges to end austerity in a country struggling to recover from severe economic crisis.

The extent of the challenge became clear Sunday when one of Syriza's most respected members, 92-year-old wartime resistance hero Manolis Glezos, blasted the concessions made by the government.

"Calling a spade by another name does not change the situation," Glezos, who is a Syriza member of the European Parliament, wrote in a blog entry.

"I wish to apologise to the Greek people for taking part in this illusion," he said, calling on Syriza supporters to "react before it's too late."

"There can be no compromise... between a slave and a conqueror, the only solution is freedom," Glezos said.

Pappas, a close aide of Prime Minister Alexis Tsipras, said the talks would be "a daily battle... every centimetre of ground must be won with effort."

While many said Athens had capitulated to European demands in the deal on the four-month extension, Tsipras insisted Saturday Greece had achieved an "important negotiating success" which "cancels out austerity."

In a televised address, Tsipras said his government had foiled a plan by "blind conservative forces" in Greece and abroad to bankrupt the country at the end of the month, when its European bailout had been scheduled to expire.

But while fears of a disastrous Greek exit from the eurozone receded, the 40-year-old premier warned that the "real difficulties" lie ahead. He said his government would now focus on negotiating a new reform blueprint with Greece's creditors by June.

- 'A four-month truce' -

The government which came to power last month pledging to end deeply unpopular austerity measures and renegotiate Greece's huge debt had asked for a six-month loan assistance until it can submit its four-year reform plans.

Instead, it received less time and no new money to tide it over in the meantime.

Still, Greek officials on Sunday insisted that the government would apply its radical agenda within the framework provided by Europe.

"This is a four-month truce that gives us time and a breath of air," junior administrative reform minister Giorgos Katrougalos told Skai TV.

He added that Athens intended to meet its fiscal requirements "by making the rich pay."

Pappas said the government still intended to hire up to 11,500 civil servants this year and spend up to 400 million euros ($455 million) on immediate poverty relief.

French President Francois Hollande tried to sweeten the pill for Greeks, calling it a "good compromise" that gives Athens time to finalise its reform plans.

But the government's domestic rivals were less generous.

"If this is 'successful negotiation', what would count as a fiasco?" asked conservative former prime minister Antonis Samaras.

Athens said it had averted threatened cuts to pensions and tax hikes, and had persuaded its European creditors to drop unrealistic budget demands.

- Hard-fought deal -

To win the hard-fought deal, Athens pledged to refrain from one-sided measures that could compromise fiscal targets, and had to abandon plans to use some 11 billion euros in leftover European bank support funds to help restart the Greek economy.

On Tuesday, Greece's creditors will decide whether to proceed with Friday's agreement, with the chance that the compromise could be scrapped if they are not satisfied.

Two previous rounds of talks ended in acrimony with Greece accusing Germany and other hardline EU member states of sabotaging a deal.

If Athens sticks to its commitments, it stands to receive up to 7.2 billion euros in funds still left in its 240 billion euro bailout ($273 million) from the EU and the International Monetary Fund.

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