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Greece : leadership health-ridden ahead of bailout revision bid

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Greece’s new prime minister and finance minister will for health reasons both miss a key EU summit where they were to launch efforts to renegotiate the terms of an unpopular austerity-centred bailout. 

Prime Minister Antonis Samaras was told to avoid travel after undergoing major eye surgery, the government said on Sunday, meaning that Greece will be represented at the summit by Foreign Minister Dimitris Avramopoulos.

Incoming Finance Minister Vassilis Rapanos, who has yet to take his oath of office, is currently also in hospital after being admitted with strong stomach pains on Friday.

Neither Samaras nor Rapanos are due to be discharged from hospital until Monday, and the latter is likely to be kept until Tuesday. Experts from Greece’s so-called “troika” of creditors — the EU, IMF and European Central Bank — will postpone an audit of the country’s finances originally scheduled to start on Monday, and vital for the release of loan funds.

“There is a delay, the exact date of the (auditors’) arrival will be set in the coming days,” a government source told AFP.

The PM’s surgeon Panagiotis Theodosiadis said Samaras would take “days and weeks” to fully recover from a 3.5-hour surgery on Saturday to remedy 11 cracks found in his retina. He is expected to stay at home for at least a week. But the coalition government under Samaras that emerged from June 17 elections already has a mountain to climb and no time to lose.

State coffers are almost empty, with reserves set to last until late July.

Structural reforms pledged in return for billions of euros in EU-IMF loans were suspended as the country held two elections in six weeks, with the first on May 6 failing to produce a workable government.

As a result, the creditors keeping Greece alive — the EU, IMF and the European Central Bank — lack a clear image of where the country stands, and no new funds can be released until this is clarified.

The exception is a one-billion-euro instalment left over from before the elections, which is expected to be released by the end of June. But it is too small a sum to make a difference. Greece needs 7.6 billion euros ($9.5 billion) just by the end of July to cover maturing debt and the state’s tax takings are short of target.

Greek banks are also in poor shape despite a recent recapitalisation to cushion the effects of a major sovereign debt rollover. Greek newspaper To Vima on Sunday said Athens breached the rules of its EU-IMF loan agreement by taking on some 70,000 public sector staff in two years, undermining efforts to reduce the state payroll.

The weekly added that a bill tabled in May to evaluate civil servants and axe nearly 2,000 ministry posts was never passed into law.

In his election campaign, Samaras had pledged to redress “injustices” in the austerity-centred bailout deal which most Greeks consider to have exacerbated the recession and killed off any demand left in the economy.

The new government, built around the conservatives and backed by socialists and moderate leftists, on Saturday said it wanted to freeze further civil service layoffs and bargain for a two-year extension to its tough fiscal adjustment.

The aim would be to meet fiscal goals “without further cuts to salaries, pensions and public investment” and new taxes, a government policy plan said. There have been indications that a target extension can be considered, but eurozone hardliners such as Germany and Austria are unlikely to accept a watering-down of Greek commitments without a fight.

Another Greek newspaper, Kathimerini, on Sunday said creditors are unlikely to accept the new government’s request to reverse a minimum wage cut and recent labour reforms to facilitate layoffs.

“The troika is displeased with the content of the three-party policy plan,” the daily said.

Athens, June 24, 2012 (AFP)