* Smaller coalition partners meet over TV closure
* Greece first developed market to be downgraded to emerging
* Journalists strike, left protests at state broadcaster closure
* Setbacks follow failure of key gas privatisation
By Lefteris Papadimas and Renee Maltezou
ATHENS, June 12 (Reuters) - Greek Prime Minister Antonis Samaras faced down a political revolt on Wednesday from partners in his ruling coalition after his government abruptly switched the state broadcaster off the air in the middle of the night.
Screens went black on state broadcaster ERT, cutting newscasters off mid-sentence only hours after the decision was announced, in what the government said was a temporary measure to staunch a waste of taxpayers’ money.
Samaras boasted that shutting the broadcaster was proof of the political will needed to transform Greece from “a real Jurassic Park, the only place on earth where dinosaurs survived”.
But his two centre-left coalition partners were furious, saying they had not been consulted and demanding the broadcaster be switched back on, although their remarks fell short of threats to walk out of the government.
The confrontation brought back a febrile atmosphere of political drama in a country that had seemed to be emerging from a pattern of relentless political crisis accompanying one of the biggest peacetime economic collapses in history.
Unions called a 24-hour nationwide general strike in protest, and journalists across all media called an indefinite strike. Some newspapers were shut and private TV stations broadcast reruns of soap operas and sitcoms instead of the news.
The leader of the Socialist party PASOK, Evangelos Venizelos, called for an urgent meeting of coalition party leaders. The other coalition partner, the small Democratic Left party, said restructuring the broadcaster was necessary but should take place without shutting it.
A government source said Samaras had agreed to meet coalition partners in coming days. But the prime minister made clear he had no intention of backing down, describing support for the broadcaster as an “outbreak of the hypocrisy that has brought Greece to this point”.
“All these years, people wondered whether anybody had the political will to change things,” he said. “We have the political will... There is no better proof than yesterday’s announcement.”
The return of political turmoil to Greece weighed on European stock markets, which closed lower.
Also on Wednesday, the Athens bourse was cut to emerging market status by index provider MSCI, making Greece the first country ever to lose the status of a developed market. The gesture was not only symbolically embarrassing but could also force fund managers that track indexes to ditch investments.
That followed the derailing of Greece’s privatisation programme earlier this week with the announcement that a gas firm could not be sold. The setbacks have reversed a rise in investor confidence that had prompted Samaras to say the risk of Greece being expelled from the euro zone was over and a “Greekovery” was under way.
Centre-right leader Samaras has ruled in fragile coalition with the two centre-left parties since winning power last year.
“ERT has become a catalyst on issues of democracy, a fair state, cohesion of this government and stability regarding the course of the country,” PASOK chief Venizelos said. “We shouldn’t create crises without a reason out of nothing.”
One official from Samaras’s New Democracy Party said the prime minister was considering calling a confidence vote, although a senior government official denied plans to do so.
“It could be highly destabilising if it moves to a confrontation in parliament where the two smaller political parties have to humble themselves to avoid a next election or stick to it and force a next election,” said political analyst Theodore Couloumbis.
“BIG FAT FEAST”
The government promised to relaunch ERT within weeks, saying it was taken off air so suddenly only due to fears that workers would damage state equipment.
The 75-year-old Hellenic Broadcasting Corporation ERT has shed viewers since the rise of commercial television and radio, and its three statewide stations had just a 13 percent combined audience share when it was switched off.
Its 2,600-strong staff include 600 journalists. Many Greeks cite the broadcaster as an example of inefficiency, overspending and jobs given in return for political favours.
Nevertheless, in a country where nearly two thirds of young people are now unemployed after years of relentless cuts and tax hikes there is a visceral public belief that the government should not slash jobs. Greeks were stunned by the fast shutdown.
“It had to happen. ERT was a big fat feast for the political parties,” said Maria Panagiotou, a 65-year-old retiree. “But the way they did it is unacceptable. How can this happen in Europe?”
Athens journalists’ union ESIEA said its strike would end only “when the government takes back this coup d‘etat which gags information”.
Some ERT journalists occupied the broadcaster’s building in defiance of government orders and continued broadcasting over the Internet, showing sombre newscasters deploring the shutdown and replaying images of thousands gathered outside to protest.
ERT reporters from as far away as Australia appeared on air to describe the outrage of local Greek communities.
A senior government official said Athens was under pressure to show visiting EU and IMF inspectors that it had a plan to fire 2,000 state workers as required under its bailout, and the ERT shutdown was the only option available to meet the target.
The European Commission said it did not seek ERT’s closure under the bailout but did not question the decision. France’s Socialist government voiced outright condemnation, calling it “very worrying and regrettable”.
Opposition leader Alexis Tsipras called it “a coup, not only against ERT workers but against the Greek people”, and accused Samaras of the “historic responsibility of gagging state TV”.
The far-right Golden Dawn party was the only one that openly welcomed the closure, with lawmaker Ilias Panagiotaros tweeting: “ERT, that Socialist-Communist shack, is finally closing.”
The ERT crisis overshadowed MSCI’s reclassification of the country as an emerging market. MSCI said the Athens bourse had been too small for a developed market for two years. The stock market traded at two-month lows after the announcement.
Although reclassification could mean some funds are required to sell Greek shares, brokers said the move could also bring inflows by allowing Greece to win a share of funds allocated for emerging markets.
“Emerging market funds could not enter since Greece was classified as developed market. Now it will be on their radar,” said Theodore Krintas, head of wealth management at Attica Bank.
Yields on Greece’s 10-year benchmark bond crept back above 10 percent after Athens failed to sell state gas firm DEPA on Monday, putting it at risk of missing bailout targets.