Greek strike halts transport, people back reform

ATHENS (Reuters) - A one-day general strike crippled Greece’s transport and public services on Wednesday but is unlikely to halt government austerity measures to tackle a debt crisis that has rocked the euro zone.

As tens of thousands of strikers marched through Athens to protest against EU-prescribed tax hikes and pay cuts aimed at reducing a double-digit deficit, Athens and Berlin traded accusations about World War Two reparations.

And credit ratings agency Standard and Poor’s said it may downgrade Greece’s rating within a month if a deeper than forecast recession makes the government’s steep deficit-cutting target appear hard to achieve.

The 24-hour general strike grounded flights, ships and trains, and closed schools, ministries and tourist sites, but stopped short of bringing Greece to a standstill.

Analysts said it was unlikely to influence plans to slash the deficit by four percentage points this year from 12.7 percent of GDP unless it is followed by more intense disruption.

“The strike will not have a major impact on the government’s plan to take the country out of the crisis,” said Theodore Couloumbis, deputy head of the Athens-based ELIAMEP think-tank.

“According to opinion polls, most Greeks realize the severity of the situation and feel painful measures are needed.”

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Scuffles broke out on the fringe of the protest, with police firing teargas to disperse groups of stone-throwing youths. Two protesters were slightly injured.

“No sacrifices, the rich should pay for the crisis,” demonstrators chanted as more than 20,000 marched on parliament in an otherwise peaceful protest.


In a sign of persistent market jitters, Greece’s borrowing costs rose after Czech Finance Minister Eduard Janota said Athens would find it impossible to slash its budget deficit as fast as promised.

The spread between Greek and German benchmark bonds widened to about 340 basis points. Greece is trying to pick a moment to tap debt markets with a new bond.

The Socialist government hit back at European criticism of Greece’s fiscal management, accusing European Union partners of double standards and poor leadership.

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Deputy Prime Minister Theodoros Pangalos said Italy, France and Belgium had used the same techniques as Greece to mask their true deficits to qualify for the euro zone.

He said Germany was ill-placed to criticize Athens given its conduct during the Nazi occupation of Greece in World War Two, including the looting of central bank gold reserves, prompting a reaction from Berlin.

“I must reject these accusations,” German Foreign Ministry spokesman Andreas Peschke said. “A discussion about the past is not helpful at all to solve the problems...facing us in Europe today.”

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The public and private sector unions, which together represent half of Greece’s workforce of 5 million, want the government to scrap plans to freeze public wage, hike taxes and increase the retirement age.

“Today, Europe’s eyes are turned on us,” said Yannis Panagopoulos, head of the private sector union GSEE. “We ask the government not to give in to the desires of the markets, to set people’s needs as a priority and adopt a mix of economic and social policies that won’t lead to recession but to jobs.”


Fitch Ratings on Tuesday downgraded the ratings of Greece’s four largest banks, expecting fiscal tightening to weigh on the economy and loan demand, hurting profits.

The strike coincided with a visit by EU officials assessing whether Greece is on the right fiscal track. Greece’s debt crisis has shaken the euro and sent peripheral bond and credit default swaps markets reeling.

A Reuters poll of economists showed the Greek crisis has set back further euro enlargement and was likely to delay the main emerging European economies from joining the single currency by at least a year until 2015 at the earliest.

“The euro zone countries will want to be absolutely sure that they are not bringing a new ‘Greece’ to the club,” said Diego Iscaro, economist at IHS Global Insight.

Under the scrutiny of EU policymakers and markets, the government has so far refused to give in to protesters’ demands. It has said it may decide more measures to cut the deficit after talks with the visiting EU officials.

Workers and employers gave vastly different participation estimates in the strike. Government officials said only about 16 percent of public sector workers walked off the job, but public sector union ADEDY put participation at 90 percent.

Most shops in the capital were open, some banks were closed and others empty, and the capital’s chaotic traffic was quieter than usual. The Athens stock exchange operated normally.

Ships stayed tied up in dock and monuments such as the Athens Acropolis remained shut. But the street protests failed to attract more than the usual numbers.

Spanish workers unhappy about plans to raise the retirement age marched on Tuesday but the main protest in Madrid seemed relatively small in a sign that the country’s unions may be weakening.