Greece heads for standstill before austerity vote

ATHENS Mon Oct 17, 2011 1:16pm EDT

A man shouts slogans during a rally of the ''Indignant'' group in front of the parliament in Athens October 15, 2011. REUTERS/Yiorgos karahalis

A man shouts slogans during a rally of the ''Indignant'' group in front of the parliament in Athens October 15, 2011.

Credit: Reuters/Yiorgos karahalis

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ATHENS (Reuters) - A ruling Greek Socialist party deputy quit parliament on Monday to protest against austerity, striking a blow at Prime Minister George Papandreou's efforts to secure approval of a deeply unpopular package of measures later this week.

Although the resignation does not change the government's majority, it compounds Papandreou's woes. A 48-hour general strike has been timed to coincide with the vote, seen as essential to secure a loan installment and avert bankruptcy.

"I can no longer continue to vote without knowing what I'm voting about ... to vote for unjust and unpopular measures under threat that the government will collapse," Thomas Robopoulos said in his resignation letter to the prime minister.

Papandreou had earlier appealed for unity, saying these were critical times ahead of an EU summit on Sunday, where European leaders are meeting to forge a comprehensive solution to the Greek debt crisis that is shaking the euro zone.

"This is maybe the most crucial week for Greece and Europe," Papandreou said in a meeting with President Karolos Papoulias.

"It is very important on our part, that the entire Greek political class shows a sense of unity and responsibility."

Greece's two main unions, representing about half the four million-strong workforce, are preparing for one of the biggest protests since the crisis began two years ago, likely to hit food and fuel supplies, disrupt transport and leave hospitals run by skeleton staff.

The strike is set for Wednesday and Thursday to coincide with the vote in parliament, expected to take place in two stages on both days.

Memories are fresh of battles between riot police and stone-throwing protesters at anti-austerity demonstrations in June and sporadic incidents were reported on Monday with a petrol bomb hurled at a garbage truck in a northern suburb of Athens.

Trailing badly in opinion polls, Papandreou has defied a wave of protests, pledging to push through a deeply unpopular package that includes tax rises, pay and pension cuts, job layoffs and changes to collective pay deals.

His four-seat majority is expected to hold up with the support of smaller opposition parties but at least one more member of the ruling PASOK party may oppose part of the bill.

With European Union leaders racing to prepare a new bailout deal in time for a summit next Sunday and growing speculation that Greece may be forced to default on its massive public debt, Papandreou said Athens had to show its resolve.

"We must show we want the great changes, to go into this negotiation on October 23 with our head high, with a strong negotiating hand, to make sure we obtain the best for Greece," he said.

Trapped in deep recession and choked by a debt equivalent to some 162 percent of gross domestic product, Greece has been shut out of bond markets and would run out of money within weeks without international support.

Inspectors from the EU and the International Monetary Fund were in Athens last week and have recommended releasing an 8 billion euro aid tranche to enable the government to keep paying its bills past November.

That will only provide temporary relief and they have told Papandreou's struggling team to push ahead with further belt-tightening, structural reforms and privatizations, on top of what are already the deepest cuts in Greece's postwar history.

"I WANT THEM OUT"

How far this will be possible remains unclear in the face of growing bitterness from Greeks who have increasingly turned against their political leadership.

"I want them out. They can't solve our problems because they are the ones who got us here," said Maria Papadopoulou, a 57-year old pensioner who helps to support both an unemployed daughter and a son at university.

"I don't usually take to the streets but this week we have to rise up and send a message to the government," she said, as mournful protest songs from the era of the 1970s military junta blasted out of loudspeakers set up by strikers occupying the nearby finance ministry.

"These measures are targeting the wrong people, the poor. I hope they won't be passed," she said.

With the official unemployment rate running at about 16 percent and many people already suffering wage cuts of more than 50 percent over the past two years, there has been growing doubt that repeated doses of austerity can solve the crisis.

The strike will hit public sector institutions including tax offices, state schools and airports as well as banks and businesses ranging from taxis and clothes shops to suppliers of everyday staples like bakers.

As well as the finance ministry, the justice ministry has also been occupied and even judges will hold indefinite stoppages, only issuing rulings on major cases.

Customs officials who clear fuel refinery deliveries hold a 24-hour strike on Monday and will decide whether to extend their action, potentially hitting petrol supplies.

A 48-hour strike by seamen, starting on Monday, has brought passenger ferries to a halt, disrupting traffic to the country's dozens of islands.

Garbage piled up on Athens streets for a week due to labor action and municipalities hired private firms to collect it before a "disease bomb" explodes, the health minister said.

(Additional reporting by Harry Papachristou and George Georgiopoulos; Writing by James Mackenzie and Dina Kyriakidou; Editing by Paul Taylor)

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Comments (25)
hariknaidu wrote:
We need a paradigm shift to allow Greece time – may be a decade or more – to recover from this insolvency crisis.

Moreover, Greek Conservative Party needs to put the survival of Greece (bankruptcy) before its own political priorities. There is urgent need for a government of natinal unity to provide political backbone to restructuring/adjustment process under IMF/EU.

Under current EU laws, banks are under surpervision of their national regulators (not EU). Germany, in particular, is not ready to allow its banks supervision to be delegated to an EU bloc regulatory authority.

The crisis will not be overcome unless national regulators are finally replaced by an EU regulatory authority with teeth….

Oct 17, 2011 6:21am EDT  --  Report as abuse
steve12321 wrote:
I still don’t understand why Germany, Finland and Holland should pay Greece’s debts forever. The crisis will not be overcome by yet more EU regulation, bureaucrats or top-down actions. It will only be solved when markets are convinced that the PIGS can live within their means.

You can’t have a German lifestyle yet work less, save nothing and retire early with huge pensions. Greece should return to the drachma, devalue it and accept a lower standard of living.

Oct 17, 2011 8:51am EDT  --  Report as abuse
belseware wrote:
Isn’t the U.S. deficit approaching 10% of GDP also? What’s the big deal? We can manufacture inflation and get out of this embarrassing little detail.

(sarcasm alert)

Oct 17, 2011 8:52am EDT  --  Report as abuse
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