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Greek government in desperate battle to avert default

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“This is a crucial moment for Greece,” says Panagiotis Korliras, a professor at the Athens University of Economics and Business. “The prime minister’s presence is required to guarantee that his cabinet implements the measures drafted to solve this crisis. But he’s also the leader of the Socialist party, and as such, he has to make sure he still has the support of his party friends.”

According to agency reports, troika officials left Greece two weeks ago in frustration, having found a gap of 1.7 billion euros ($2.3 billion) in the Greek budget. The government reacted by imposing a new tax on real estate, but the inspectors remain doubtful and have made it clear that they would prefer structural reforms rather than new levies. Instead of traveling back to Athens, they will now hold a telephone conference with Greek Finance Minister Evangelos Venizelos today.

The emergency cabinet meeting on Sunday did not yield any palpable results, but speaking to the press afterward, Mr. Venizelos suggested that further austerity measures might be announced after Monday’s phone conversation with the troika officials. “Our main target will be to reduce spending, to rein in the state,” he told reporters.

This means more layoffs in the public sector, Professor Korliras says. “It remains to be seen if Greece’s political system is going to accept this kind of pressure from the troika.”

The political opposition is trying to capitalize on the situation. Conservative leader Antonis Samaras called for snap elections and, referring to yet more austerity measures, said: “This isn’t milking the cow any longer, this means slaughtering it.”

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