Bonds News

UPDATE 1-Passengers stranded as Greek sailors protest reforms

* Dockworkers strike against opening of labour market

* 900 mostly Spanish tourists stranded at port

* Greeks prepare for more pain as EU/IMF talks continue

* Reforms focus on opening markets, cutting costs

(Adds 900 tourists unable to return to ship, stay in port)

By Renee Maltezou and Angeliki Koutantou

ATHENS, April 26 (Reuters) - Striking dockers and protesters at Greece’s largest ports blocked hundreds of tourists from returning to their ship on Monday in a protest against reforms aimed at saving Greece’s debt-ridden economy from deeper crisis.

In the first strike since Athens asked its euro zone peers and the International Monetary Fund for a bailout on Friday, sailors protested against one of the government’s first measures to liberalise Greece’s restrictive labour market.

The Coast Guard said around 400 dockers and protesters from the Communist union PAME prevented around 1,000 mostly Spanish passengers from returning to the Maltese-flagged ship Zenith.

“We had to take them to hotels,” said Mihalis Nomikos, head Zenith’s operator, Donomis. “We are waiting to see if they will be able to leave later today or early tomorrow morning. The impression we made on them was really bad.”

Antonis Dalakogiorgos, head of the Panhellenic Sailors’ Union, said the shipping reform, which allows non Greek cruise ships to moor at multiple Greek ports without hiring a Greek crew, was unacceptable.

“Lifting restrictions... will mean the end of Greek-flagged cruise shipping and the funeral of Greek sailors,” he said.

Unrest has risen since Prime Minister George Papandreou’s government cut public wages, froze pensions and raised taxes as part of a plan to slash the budget deficit by almost a third this year, from last year’s 13.6 percent of economic output.

Many Greeks are now bracing for more austerity, and media have reported that European Union officials and the IMF have proposed more than a dozen new steps to cut state spending and boost competitiveness.


Polls show government support is waning as the reforms take hold, although Papandreou still leads in approval ratings.

Analysts say the success of measures will hinge on public tolerance, while a deeper-than-expected recession and a spike in borrowing costs is seen sure to force more cutbacks if Greece wants to slow the growth of its 300-billion-euro ($400-billion) public debt.

Questioning whether German concerns about the 45-billion euro aid package -- the world’s largest ever attempted and the euro zone’s first bailout -- could prevent Athens from refinancing debt due in May, markets continued to punish Greek assets, driving bond yields to a new 12-year high.

Economists are also unsure whether the aid can prevent Greece from having to default or restructure its debt down the road. Barclay’s Capital wrote in a note it did not see the EU and IMF pushing for that move now, but it could come later.

“Uncertainty remains high,” its researchers wrote. “This suggests to us that it is still very risky to hold Greek debt.”

Yannis Stournaras, head of the Athens-based Foundation of Economic Research, said the relatively closed economy meant prices for some goods and services were 15 percent higher than the euro zone average. Eliminating labour restrictions would boost growth and competitiveness by 10 percent or more.

“These profit margins will converge with the euro zone average and in the medium-term produce much higher GDP and productivity,” he said.

Loathe to stoke public unrest similar to that which caused violent rioting and deaths in the late 1990s Asia crisis, the IMF has taken pains to focus on the social aspect of reforms.

But it is expected to ask Athens to hike the pension age to as high as 67 from an average of around 62, scrap bonuses that account for a large part of payroll costs and target items such as a 1951 law granting pensions to thousands of unwed daughters of retired civil servants and banking and military officials.

Labour Minister Andreas Loverdos said the IMF had asked if Greece would end a system in which all workers receive two extra monthly salaries a year as bonuses, daily Ta Nea reported. “I was asked whether we are thinking of ending the 14th-month salary bonus in the private sector, why not move to just 12-month salaries,” he told the daily. He did not specify the government’s response. (Additional reporting by George Georgiopoulos; Writing by Michael Winfrey; Editing by Jon Hemming)