Government deadlocked with Troika... again

After four hours of deliberations, the problem is nowhere near a solution. Exiting the PM's office, Venizelos confirmed that bank recapitalization is the No.1 impediment in the negotiations with the Troika auditors. A high ranking member of the ministry said the Greek side will be posing the issue to next Monday's Eurogroup conference.

The government position is that the recapitalization debacle be separated by the Greek economy evaluation report, until the European bank stress tests are completed by the end of the year.

In the meantime, recapitalization procedures will go ahead based on the Bank of Greece assessment, which is lower than the one the IMF in particular suggests. If need for more capital arises after the European stress tests are completed, there will be an additional procedure.

In order to persuade the auditors, the government is willing to commitm to not usig any of the 14 billion euros in the EFSF fund until a full resolution is reached by the two sides. Finance ministry officials point out that it is actually the IMF representative who is blocking procedures by refusing to unbind the evaluation process from the recapitalization issue.

The second major obstacle in negotiations is the issue of changes in labor market regulation. The auditors will meet with the Labor minister on Thursday, in an attempt to resolve the issue of the minister's consent to collective layoffs. The Greek side wants the minister to have a say, the Troika reps want absolutely unregulated layoffs