Greek talks break off despite looming bankruptcy

Papademos is under pressure from EU leaders and international financiers after already missing several deadlines.

He needs the backing of the three coalition parties for the cuts to go ahead and for the EU to agree a second bail-out worth €130 billion. Without the money, Greece will default on bond payments in March.

A snap meeting of eurozone finance ministers is to take place on Thursday in Brussels at 6pm local time.

For his part, Greek finance minister Evangelos Venizelos hopes he will have enough to put on the table for colleagues to approve the extra aid by the time they get down to business. "I leave for Brussels with hope that the eurogroup will take a positive decision concerning the new aid plan," he told press prior to his departure from Athens to the EU capital.

The 50-page austerity plan includes a 22-percent cut in the minimum wage, a 32-percent cut in salaries for young employees and the sacking of 15,000 public sector workers.

The measures prompted new strikes and protests this week. But financial newswires report they still fall short by some €300 million in terms of demands by the so-called troika of lenders - the European Central Bank (ECB), the European Commission and the International Monetary Fund (IMF).

The three factions in the coalition - the centre-left Pasok, centre-right New Democracy and right-wing Laos parties - are reluctant to sign up to unpopular reforms ahead of elections in April.

Laos leader George Karatzaferis has also demanded that the text - put forward on Wednesday morning - be translated into Greek before he approves it. He noted after Wednesday's meeting that the main outstanding issue is the size of cuts to supplementary pensions.

Sympathy for Greek politicians is wearing thin in Brussels and Berlin.

Home affairs commissioner Cecilia Malmstrom wrote in her blog on Wednesday: "It is absolutely necessary that the Greek government and all political parties pull themselves together and accept the demands of the IMF and the EU." Germany's state secretary for finance, Thomas Steffen, said: "I think we can fairly say today that we have made very few steps forward in Greece since 2010. Frighteningly few."

ECB to the rescue?

Even if the eurogroup gives its blessing and private bondholders write off up to 70 percent of Greek debt in associated measures, markets are already saying this might not be enough.

Credit ratings agency Standard & Poor's (S&P) noted on Wednesday the ECB might also have to write off some Greek bonds because most of the country's debt has migrated from the private sector to the eurozone bank and national governments. "Because only a small sub-component of investors are actually taking the haircut and the official sector is not, or only partially, then the reduction ... is probably not sufficient to make the debt sustainable," S&P analyst Frank Gill said.

Meanwhile, time elapsed since the EU designed the €130 billion bail-out back in October has seen a new funding gap of €15 billion emerge.

The Washington-based IMF has ruled out extra help. ECB options include not cashing in the interest on its Greek bonds or swapping them at a reduced value with the eurozone's temporary bail-out fund, the European Financial Stability Facility.

An EU official told EUobserver: "The problem for the ECB is that they have to avoid anything that looks like quantitative easing [printing money]."

The bank's board is to meet on Thursday but it is unlikely to make a public statement until the other elements of the second bail-out are in place.