BRUSSELS ? On only his third day in office, Greece's new Finance Minister Evangelos Venizelos faces his first big test: He must convince his eurozone counterparts to release a loan installment his country needs to avoid defaulting on its massive debts next month, and to commit to billions in new loans to keep Greece afloat in the coming years.
It won't be easy. The eurozone and the International Monetary Fund have based their approval of new money on passing budget cuts worth some euro28 billion ($40 billion) as well as an unpopular euro50 billion privatization program before the end of the month.
Those measures have already sparked massive protests and forced Prime Minister George Papandreou to reshuffle his government, promoting former rival Venizelos to the key finance post.
At Sunday night's meeting in Luxembourg, Venizelos will face a difficult audience. The IMF and Germany, the two single biggest contributors to Greece's existing bailout, have already had to back away from previous demands as panic swelled in markets around the world, giving Europe and Greece more space to sort out their differences.
The IMF indicated that it will sign off on its portion of the net loan installment even if a new, longer-term bailout program has not yet been finalized. That euro12 billion must land in Greece's account by mid-July to repay billions of euros in maturing bonds. The move flouts the IMF's own rules, which usually require that a rescued country's finances be secure for the coming 12 months before any money can be transferred.
Germany, meanwhile, softened its stance on a more forceful involvement of banks and other private investors in a new bailout for Greece, saying Friday that any private-sector contribution will be voluntary and won't spark a so-called "credit event," a partial default by a country that threatens to hurt Greek banks and shake financial markets.
The exact role of the private sector in a new bailout, will feature high in talks that will likely last deep into Sunday night and continue Monday morning. Papandreou confirmed Sunday that Greece is in talks over a second bailout package "roughly equal" to the first euro110 billion ($157 billion) rescue it accepted.
Just over a year after that bailout, Greece is trailing the targets set out in the bailout program and without the new measures its budget deficit will remain above 10 percent of economic output this year ? far from the promised 7.5 percent. The country's debt is expected to reach 160 percent of gross domestic product by the end of 2011, while its economy continues to shrink.
The EU has called for Greece's Socialist government to get the backing of the main opposition party for the measures set out in the bailout program, as they will require tight budgeting for years after Papandreou's current term expires. But so far opposition support is elusive and Papandreou earlier this week had to enter emergency talks with his own party of stem defections from lawmakers.
The harsh austerity measures and the bleak outlook for the depressed Greek economy and the resulting street protests are increasingly challenging the survival of Papandreou's government.
Opening a three-day parliamentary debate Sunday that will culminate in a confidence vote late Tuesday, Papandreou blamed bloated and inefficient state sector for bringing the country to its knees and vowed to effect deep changes with a fall referendum on the constitution that would make it easier to get rid of inept officials or workers.
In Germany, meanwhile, skepticism persisted over whether another aid package that does not force private creditors to share part of the burden will be sufficient to stabilize Greece, with several lawmakers from Chancellor Angela Merkel's coalition government saying a debt restructuring is all but inevitable.
"We need a haircut on the debt ? and that won't happen voluntarily," conservative lawmaker Manfred Kolbe told German news magazine Der Spiegel.
"It's now a year that experts tell me that a Greek debt restructuring is necessary. Now the time has come to start including private creditors," Horst Seehofer, governor of Bavaria state and leader of one of the parties represented in Merkel's government, was quoted as saying by the magazine.
Separately, a poll showed that almost every second German thinks Greece should exit the eurozone and return to its old currency.
In the poll published by Focus news magazine, 46 percent said Greece should return to the drachma, but 47 percent of 1,000 people surveyed by pollster TNS Emnid said Greece should remain one of the 17 nations making up the eurozone. No margin of error was provided for the poll.
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Demetris Nellas in Athens and Juergen Baetz in Berlin contributed to this report.
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