Resistance to Greek austerity plan grows

 

GREEK PREMIER George Papandreou faced open dissent within the ranks of his own administration as he struggled to win support for a drastic new austerity programme in the next phase of the country’s international bailout.

After a nine-hour cabinet meeting on Monday at which three senior ministers expressed reservation about the new plan, Mr Papandreou took the battle to a key committee of MPs yesterday and the decision-making executive of his Pasok Socialist party.

Sources briefed on the talks, which continue today with a delayed meeting of the Pasok parliamentary party, acknowledged the going was very tough. Kathimerini, the Greek daily, described the increasingly febrile atmosphere as akin to a political “nervous breakdown”.

Mr Papandreou has called a formal cabinet meeting for tomorrow, after which he will bring the plan to parliament. He told his ministers on Monday an election would be a “catastrophe” but left open the possibility he might seek a referendum on the bailout plan, one local analysts say would be likely to be defeated.

Although the country’s international sponsors want a swift vote on the plan, sources within the Greek government insist this cannot be done until EU leaders give their assent to the plan at a summit in Brussels on June 24th and 25th. Mr Papandreou wants to put all the measures to a single parliamentary vote but Pasok MPs are resisting that.

The prime minister is under increasing pressure from his EU counterparts to secure a political consensus behind the new cuts in return for a €12 billion loan next month and a second bailout package next year due to the country’s expected exclusion from private debt markets.

The initiative includes €6.4 billion in budget cutbacks this year and a €51 billion privatisation plan. The plan has not been published, but reports suggest another €21 billion may be cut from the budget in the next four years. Also included are proposals for external intervention in the country’s feeble tax collection system, something the EU says will only be done at the government’s request.

With these measures subject to parliamentary approval, public statements from within the ranks of Pasok showed such a consensus will be very difficult to achieve.

The drama is playing out against the backdrop of a renewed wave of public protest against the austerity measures on the streets of Athens and other Greek cities.

Internal strife within the government spilled into the open yesterday when senior Pasok MP Vaso Papandreou, a former EU commissioner and former minister, attacked finance minister George Papaconstantinou. “When I visited you in your office in October 2009 and told you to take measures, you treated me like I was a UFO,” she said.

The effort to restore the country’s finances was flawed, she added. “There is no plan, not last year, not this year.”

As dissident MPs made clear their reservations, junior minister for Europe Mariliza Xenogiannakopoulou declared she was against the cut in the tax-free allowance to less than €6,000 and against the “memorandum” which sets out the agreements with the EU/International Monetary Fund/European Central Bank “troika”.

Ms Papandreou is also opposing measures which would enable the government to sack public sector employees, a Pasok power base. The reduction of the bloated public sector, which has over 700,000 staff, is hugely contentious, given the power of unions.

At cabinet on Monday, the prime minister ruled out abandoning the euro, saying his priority was to prevent the country’s bankruptcy. He called on all Greek political parties to support his campaign to change the country.