Greece builds on vote victory in race to cut and privatize

By Agence France-Presse
Wednesday, June 22, 2011 8:20 EDT
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ATHENS (AFP) – Greek ministers raced on Wednesday to meet a two-week deadline for budget cuts in return for EU-IMF cash to pay current bills and contain the eurozone crisis, hours after winning a confidence vote.

While the government managed to prevent any defections as it won the confidence motion by 155 votes to 143, Prime Minister George Papandreou now faces a knife-edge battle to overcome dissent within the ranks of his Socialist party over the debt-cutting onslaught.

Eurozone ministers are insisting on crash action before they will release the next slice of aid and move ahead on a new bailout.

The latest instalment is worth 12 billion euros ($17 billion), arranged under a rescue of 110 billion euros from the European Union and International Monetary Fund a year ago.

The prime minister was geared up for an inner cabinet meeting to approve a law for action worth more than 28 billion euros ($40 billion) by 2015.

The measures also include a vast privatisation programme to raise 50 billion euros, but this faces strong opposition. A 48-hour general strike against the budget reforms is on the trade unions’ agenda.

During the debate leading up to the vote in the early hours, Papandreou called for support “to avoid bankruptcy and keep Greece in the euro core.”

The outcome was particularly critical to analysts on international markets which are on edge in case the European Union is unable to prevent the Greek crisis from sending extra shock waves throughout the eurozone.

Concerns focus on rescued countries Ireland and Portugal, but Spain, or even Italy and Belgium, are considered potentially at risk of being dragged in.

But the real fight in Greece will come when the austerity measures face a vote by lawmakers by the end of the month.

“These next ten days are the most crucial in the last 30 years,” Deputy Finance Minister Pantelis Ekonomou told Flash Radio.

Papandreou set the tone early on Wednesday with a dramatic plea in parliament.

“We have a unique opportunity (to change the country),” he said.

“If we falter, if we lose heart and squander it… history will judge us very harshly.”

Greece’s main unions plan to hold a 48-hour general strike when the new measures go to parliament.

The union in the electricity operator PPC, which opposes the sale of a 17-percent stake in the company, on Monday temporarily cut power at the infrastructure ministry.

The union this week began hour-long electricity cuts around the country, intending to escalate this when the reforms are being debated.

Outside Greece, there are also fears that austerity measures in countries such as Greece are threatening a global recovery.

In a new report Wednesday, the UN department of economic and social affairs said cuts in countries such as Greece “are not only threatening public sector employment and social expenditure, but also making the recovery more uncertain and fragile”.

At stake in the Greek vote by the end of the month is obtaining the latest slice of the loan from a year ago.

“In the end the decision on this matter will be decisive for the future of aid payments to Greece, not yesterday?s vote of confidence,” analysts at German Commerzbank commented.

“(Socialist) members who were afraid of an early election last night will not necessarily vote in favour of the government?s fiscal policy,” it said.

Without this cash, Greece would not be able to pay its housekeeping bills next month, threatening a new and vicious twist to the eurozone debt crisis.

Also at stake is negotiation of a new huge rescue, expected to total about 100 billion euros, to avert default in the longer term, which Germany insists must be tied to participation by banks and funds holding Greek debt.

Top Greek ministers were also discuss the two-day European Union summit from Thursday, which will be overshadowed by risks of deep disturbance on European and even global markets.

At least two government deputies have threatened to vote against the sale of large stakes in public companies.

Thousands of protesters have gathered outside parliament for the past three weeks, part of a crisis movement modelled on a similar mobilisation in Spain.

“The political system is crumbling so we are not going to allow the situation to de-escalate,” a protester told state television NET.

Agence France-Presse
Agence France-Presse
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