Greek leaders failed on Thursday to agree on reforms and austerity measures needed to secure a bailout to avoid a messy default, forcing Finance Minister Evangelos Venizelos to go to the country's financial backers with an incomplete deal.
Athens' partners in the European Union and the International Monetary Fund are increasingly exasperated by a lack of agreement on the measures they demand in return for a 130-billion-euro ($172-billion U.S.) bailout and time is running out for Greece before a major March 20 bond redemption.
Euro-zone officials say the full package must be agreed with Greece and approved by the E.U., IMF and European Central Bank by Feb. 15 so legal paperwork can be completed in time to avoid a chaotic default that may threaten the global economic recovery.
But after repeated delays and all-night talks with leaders of the three Greek coalition parties and chief E.U. and IMF inspectors, Venizelos emerged shortly before dawn to say that one issue was unresolved.
Greece's two major labour unions called a 48-hour strike for Friday and Saturday against the reforms that the party chiefs managed to agree on.
Venizelos had hoped to present to his fellow euro zone finance ministers in Brussels a fully-fledged deal on a new bailout plan, including a commitment for 3.3 billion euros in budget cuts this year.
Prime Minister Lucas Papademos said earlier he hoped the party leaders could sort out their differences before euro zone finance ministers meet at 1700 GMT.
Before then, all eyes will be on what the ECB is willing to do to help Greece at its monthly policy meeting.
A senior government official said the party chiefs had agreed on how to make about 90% of the promised savings, leaving a relatively small hole in the calculations. The stumbling block appeared to be pension reductions.
Athens had to close this gap quickly, said the official. "Greece has another 15 days to specify fiscal savings worth 300 million euros," he said on condition of anonymity.
International lenders are demanding that the party leaders commit themselves in writing to implement the programme of pay and pension cuts, structural and administrative reforms.
However, the leaders have been loath to accept the lenders' tough conditions, which are certain to be unpopular with voters. They face parliamentary elections possibly as early as April.
Newspaper editorials criticised the harshness of the austerity measures demanded by Greece's lenders, but said there was no other option but to give in and agree.
"The memorandum seems, and in fact is, heavy and unbearable for the majority of the Greek people but unfortunately it is the only choice so that the country is not led over the cliff," financial daily Imerisia said.
Greece has been falling deeper into recession since it was rescued by a first bailout deal in May 2010, and latest unemployment data showed the country's jobless rate rose to a new record of 20.9% in November.
Industrial output fell 11.3% in December, in further proof of the deep economic malaise.
