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Greek government still split on new cuts

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Aug. 1, 2012, 2:58 p.m. | World — by Associated Press

Greek Socialists leader Evangelos Venizelos, left and the leader of the Democratic Left party Fotis Kouvelis exit the Prime Ministers office in Athens, Wednesday, July 18, 2012.
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Associated Press

Associated Press

ATHENS, Greece — Greece's Socialist party remains at odds with its conservative coalition partners over a proposed round of new austerity cuts needed for country to remain in an emergency loan program, a senior party official said Wednesday.

Socialist official Panos Beglitis made the remarks, hours before leaders of three parties in the coalition are to hold a third meeting in a week to try and hammer out a €11.5 billion ($14.1 billion) package of cuts for 2013-14, demanded by emergency creditors.

The cuts will "will not work" without major changes, Beglitis said, acknowledging that parties in the country's new coalition government are at odds over how to rescue troubled Greek public finances.

He insisted that Greece needs a two-year extension in its austerity program to make it workable.

Prime Minister Prime Minister Antonis Samaras' conservatives formed a coalition with rival Socialists and the small Democratic Left party after June 17 general elections.

Greece has been relying on rescue loans from other eurozone countries and the International Monetary Fund since high interest rates pushed it out of bond markets in 2010.

Debt monitors from the International Monetary Fund, European Central Bank and European Union — known as the troika — are currently in Greece for an inspection, and are pressing the new government to make up for past delays in long-term structural reforms aimed at reducing the size of the public sector.

Beglitis said the Socialists want to split the cuts and reforms into two stages and over a longer time period, to avoid pushing the country into deeper recession.

"Participation in a coalition government does not mean the unquestioning acceptance of everything," he told state-run NET television.

"This (austerity) program will not work under this current rationale and tactics. We are at an impasse and we must realize this."

Beglitis blamed what he described as Germany's "one-sided" insistence in economic austerity on the worsening borrowing crisis among struggling eurozone members like Spain and Italy.

And he said the government needed to negotiate a proposed extension with EU leaders instead of the troika officials.

Samaras is to meet with the Socialist leader Evangelos Venizelos and Democratic Left leader Fotis Kouvelis at 5:00 p.m. (1400GMT).

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