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Greece Warns Against Default as EU Finance Chiefs Meet
ATHENS – Greece's finance minister warned Sunday of the catastrophic results that a debt default would have for his troubled nation as the government prepared to announce an overhaul of the pension system.
EU finance chiefs meanwhile met in Brussels to try and stop the collapse in investor confidence stemming from the Greek crisis from spreading to other eurozone nations as observers nerouvsly awaited market reactions on Monday.
"The banking system would stop operating and businesses and households would automatically lose access to bank funds," George Papaconstantinou told To Vima daily, saying Athens would avoid this outcome at all costs.
"We would enter an even deeper recession of around 10 percent, maybe more, which we would not exit for years," the minister said.
He also said unpopular austerity measures agreed with the EU and the IMF in return for emergency loans could be revised if the economy improves.
"If we succeed and early results are positive, we will be able to return to a negotiation table...(and) save certain things," he said.
Greece is burdened by giant debts and a recession-mired economy and appealed to the European Union and the International Monetary Fund for help as it ran out of options to borrow on the markets amid steeply rising costs.
Fears of a Greek default have put a focus on the weakness of other European economies such a s Portugal and Spain, hitting the euro.
Crisis talks between the EU's 27 finance ministers began in Brussels on Sunday, with sources saying the focus of talks would be plans for common bailout fund of 60 billion euros (76 billion dollars) for troubled members.
Greece hopes funds from its 110-billion-euro bailout loan from its 15 eurozone partners and the IMF will start flowing before its next maturing debt payment on May 19 so as to avoid a default.
The government on Monday was set to finalise the latest element of its crisis package -- a controversial pension reform, which would then go to parliament for a vote.
The pension reform progressively raises the mandatory stay in the workforce and imposes a uniform retirement age of 65 for men and women.
The country's main union that represents around a million private employees has pledged to mobilise to prevent the pension reform from passing.
One student from Greece's powerful anarchist movement who is taking part in the protests, Iasonas, 23, told AFP: "My parents are going to lose 10,000 euros a year. They feel like they've worked all their lives for nothing."
Prime Minister George Papandreou has called a meeting with political leaders for Monday in a bid to rein in social tensions, with far-left parties boycotting the talks in protest against the government's austerity plans.
But a poll showed Greeks grudgingly accepting the need for cuts.
The survey in To Vima daily showed that 55.2 percent of respondents would accept austerity measures, while 56.3 percent prefer wage cuts to national bankruptcy and 71.3 want squabbling Greek political parties to cooperate.
The nationwide survey of more than 1,000 Greeks by Kappa Research was conducted the day after three people died in Athens when protesters firebombed a bank.
The deaths, the first in a Greek protest in two decades, have also divided the country on the necessity of new demonstrations. A candlelight vigil against protest violence will be held in front of parliament later Sunday.
Anti-globalisation activists held a separate protest outside parliament later Sunday against corruption in Greek politics.
A leftist womens' group earlier also held a protest outside the defence ministry to demand a halt to costly weapons purchases.
An arms race with neighbouring Turkey has cost Greece billions of euros.