Milk row threatens to sour Greece's latest bailout deal

ATHENS Mon Mar 24, 2014 1:38pm EDT

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ATHENS (Reuters) - Greece's government risks another rebellion over bailout terms this week after milk producers lobbied against a move to free up prices as part of efforts to make the economy more competitive.

The country's international lenders want it to ditch rules, such as limiting the shelf life of fresh milk to five days, that effectively deter importers.

But Greek dairy producers and lawmakers representing farming constituencies are fighting the move to call milk up to 11 days old 'fresh' - the latest in a long line of last-minute disruptions to Greece's bailout reviews with the European Union and International Monetary Fund.

Six lawmakers from within the ruling coalition - three from Prime Minister Antonis Samaras's New Democracy party and three from the Socialist PASOK - have opposed the proposal that will be submitted to parliament on Friday as part of an omnibus reform bill that Greece must pass to secure bailout aid.

If they vote against it, Samaras and PASOK leader Evangelos Venizelos could be forced to expel them, further reducing the government's slim majority of just 153 seats in the 300-seat assembly.

The bill - which will pave for the way for up to 10 billion euros ($14 billion) of aid - is expected to pass after last-minute wrangling, but the row has highlighted how powerful lobbies can undermine the country's bailout lifeline.

"You don't need to be an expert to understand that extending the shelf life is aimed at allowing milk from abroad to be labelled as fresh," PASOK lawmaker Mihalis Kassis told Greek radio at the weekend. "If that's a prerequisite by the (EU/IMF) troika then we deserve what we get."

The controversy has captured headlines and days of debate on Greek television, overshadowing expectations that the country will soon be able to raise money on bond markets again.

"It is unfair and saddening, at a time when Greece is spreading its wings to emerge from a rut, that there is such dissonance," Samaras said during a trip to Brussels on Friday.

"MPs drowning in a glass of milk!" the daily Ethnos wrote on its front page on Saturday. "Spoiled milk" proclaimed the center-left Eleftherotypia newspaper's headline.

Greece is the only country in Europe that has legislation to determine the shelf life of fresh milk and the price, at around 1.30 euros per litre, is among the highest in the EU. The Paris-based Organisation for Economic Co-operation and Development (OECD) says Greeks paid about a third more for dairy produce than the EU average in 2012.

(Editing by Deepa Babington/Ruth Pitchford)

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