PRIME Minister Lucas Papademos appealed to Greeks last night to support deep budget cuts needed to win a second aid package while leaders of the two biggest parties urged their lawmakers in parliament to pass the austerity bill or risk financial meltdown.
“We are looking the Greek people straight in the eye with full knowledge of our historical responsibility,” Papademos said in a televised address on the eve of the vote in Athens on the €130-billion ($171 billion) package.
“The social costs that come with these measures are contained in comparison to the economic and social catastrophe that will follow if we don’t adopt them.”
With only weeks remaining before the country faces a €14.5-billion bond payment, George Papandreou and Antonis Samaras, the leaders of the two largest parliamentary parties, urged support for the bill as lawmakers, with an eye on elections as early as April, bristled at measures such as a 22- percent reduction in the minimum wage, smaller pensions and immediate job cuts for as many as 15,000 state workers.
“We have to sacrifice a lot so as not to sacrifice everything,” Papandreou, leader of the Socialist Pasok party and the former prime minister, said yesterday in Athens. “We must speak honestly and tell Greeks what bankruptcy really means. It means chaos.” The measures equal about 7 percent of gross domestic product over three years and include a debt swap that would shave €100 billion ($132 billion) off more than €200 billion of privately held debt.
Protests were scheduled for outside the Parliament building in central Athens yesterday as the final debate and vote on the bill gets under way. Police in the city clashed with protesters on February 10 after unions started a 48-hour strike against the austerity measures demanded by the so-called troika of international creditors monitoring Greece’s progress.
Samaras, the leader of New Democracy, the second-biggest party, said a write-off of debt through a voluntary exchange would allow the country to step back from the precipice. It was self-evident that party discipline would be imposed during the vote on a second financing package, he said, adding that elections are needed as soon as financing is secured, as previously agreed to by party leaders.
“It won’t solve the problem, but it will help,” Samaras told party lawmakers yesterday. “It distances us from bankruptcy, looting, the chaos that would follow.”
Five ministers resigned from Papademos’s interim government in the space of two hours on Febuary 10 instead of voting for the austerity measures.
About 12 deputies from the New Democracy party may defy Samaras and oppose the bill, state-run television NET reported, without saying how it got the information. Another 20 from the socialist party will do the same, the broadcaster said.
The Laos party, which has 16 members in the 300-seat parliament, is opposed to the plan. Its four ministers in the Papademos government have resigned.
Papademos’s interim government was formed three months ago with the express mandate of securing the second loan package. It was supported by three parties—Pasok, New Democracy and Laos—which gave him 253 votes in the chamber.
“What has particularly bothered me is the humiliation of the country,” George Karatzaferis, the head of Laos, said on February 10. “Clearly Greece can’t and shouldn’t do without the European Union, but it could do without the German boot.”
German Finance Minister Wolfgang Schaeuble told lawmakers in Berlin on February 10 that Greece was missing deficit goals and needed to do more. Schaeuble, briefing lawmakers in Berlin on troika estimates relayed on February 9, said current plans would leave Greece’s debt as high as 136 percent of gross domestic product (GDP) by 2020, according to two people in the meeting. That compares with the 120 percent foreseen in the second bailout. Debt was about 160 percent of GDP last year.
Yesterday’s vote amounts to a ballot on euro membership, Finance Minister Evangelos Venizelos said on Saturday. Papademos reiterated that failing to vote for the accord and implement the reforms would lead to an uncontrolled collapse of the economy, and “sooner or later, out of the euro,” he said yesterday.
“Greece, from a country in the core of the euro area, will become a country isolated, on the margins of Europe,” he said.
Troika officials at the meeting had proposed euro-region finance ministers contribute €15 billion more “because the banks need more money,” Venizelos said yesterday in Athens.
The emergency euro-region talks broke up late on February 9, with Luxembourg Prime Minister Jean-Claude Juncker saying Greece must turn budget cuts into law, flesh out €325 million in reductions and have major party leaders sign up to the program so they don’t retreat after elections. Another extraordinary meeting was set for February 15.
(Bloomberg)
