Opposition Leader Backs Greek Changes

The Wall Street Journal

By ALKMAN GRANITSAS

ATHENS—The head of Greece's opposition New Democracy party sent a letter to European leaders on Wednesday affirming his commitment to the Greek government's reform agenda, in an effort to unlock a slice of badly needed aid for the country.

Disbursement of €8 billion ($10.8 billion) in loans from Greece's euro -zone partners and the International Monetary Fund had been put in doubt after European leaders demanded written pledges from Greece's political party chiefs to back agreed reforms. Without that aid, Greece is expected to run out of money by mid-December.

Antonis Samaras had resisted sending a written commitment to the reforms, fearing voters would see such a pledge as reneging on his promise to renegotiate Greece's bailout terms.

He is leading in public opinion polls and is poised to become Greece's next prime minister in elections expected early next year.

The letter—sent to European Commission President José Manuel Barroso, IMF head Christine Lagarde, European Central Bank President Mario Draghi and Jean-Claude Juncker, head of the Eurogroup of euro-zone finance ministers—said that New Democracy is "strongly committed to the success of fiscal consolidation and structural reforms, rebuilding market confidence and fostering economic growth." The party "fully supports the targets of fiscal adjustment, regarding all issues on eliminating the deficit and reversing the debt dynamics," it said.

But the letter reiterates Mr. Samaras's longstanding objection to the mix of austerity measures Greece has adopted to meet the budget deficit targets it has promised its creditors. He blames excessive new taxes for deepening Greece's recession—now entering its fifth year—and leading to a slump in state revenue as business bankruptcies and unemployment soar.

"On the evidence of the budget execution so far, we believe that certain policies have to be modified," the letter adds. "We intend to bring these issues to discussion, along with viable policy alternatives... we give great emphasis to allowing for prompt recovery, so that public revenues generated will help us achieve the targets set."

On Wednesday, Greece's central bank also called on Mr. Samaras and other leaders of the new coalition government to step up the pace of reforms, warning that the country faced a disorderly exit from the euro.

In its starkly worded interim monetary-policy report for 2011, the Bank of Greece said the latest European Union-led €130 billion bailout package for Greece represented a last chance for the country to make good its reform program.

"The country must avoid any further delays or deviations from targets at all costs. The present juncture is the most critical period in Greece's post-war history. What is at stake is whether the country is to remain within the euro area in the future," the report said.

German Chancellor Angela Merkel had stepped up pressure on Greek leaders earlier Wednesday to provide a written commitment.

"We need not only the signature of the Greek prime minister, but also the signatures of the parties that have formed a government in Greece. Otherwise there can be no payment of the next tranche," she said in a speech to the Bundestag, Germany's lower house of Parliament.

In insisting on written pledges, the euro zone is seeking assurances that whoever wins the February elections in Greece will carry on with reforms.

The €8 billion loan slice represents the sixth disbursement of aid under a €110 billion bailout Greece received in May 2010 from its euro-zone partners and the International Monetary Fund. An IMF official said the fund's board is likely to meet next week to decide whether to unlock the money.

—Costas Paris contributed to this article.

Write to Alkman Granitsas at alkman.granitsas@dowjones.com