Papandreou seeks support of colleagues for austerity

 

GREEK PRIME minister George Papandreou sought cabinet support for tough new austerity measures yesterday as he prepared for difficult talks with his own MPs over the next phase of the country’s international bailout.

In Lisbon, meanwhile, incoming prime minister Pedro Passos Coelho set about coalition talks after his election victory on Sunday to ensure delivery of the country’s own bailout loan.

After another night of protest in which some 80,000 Greeks crowded into the main public square in Athens on Sunday, Mr Papandreou took the campaign to back the new rescue package to his own ministers yesterday.

The meeting was the crucial first stage in a process in which his government hopes to present the entire four-year package to parliament this week in the hope of putting it to a single vote of MPs.

The plan includes a total of €6.4 billion in additional cuts this year, a €50 billion privatisation plan and the prospect of an external intervention – at the government’s request – in its tax collection system.

Local analysts say about half the Greek cabinet have serious reservations about the austerity effort, with the top of the Pasok Socialist party divided between “reformers” and figures reluctant to antagonise the party’s core supporters. Mr Papandreou was due to meet the Pasok parliamentary party last night in an attempt to persuade them to give swift support to the new plan.

The talks are complicated by a demand from 16 backbench MPs for Mr Papandreou to withdraw his plan to put the entire package agreed last week to a single vote of parliament.

The EU-ECB-IMF troika, which agreed the new package last week, wants to see parliamentary approval as soon as possible.

The stance of the 16 MPs has fuelled concerns about a backbench rebellion in a party which has a majority of six in parliament, and rising public anger at the looming round of new cutbacks.

In an illustration of concern within the government, interior minister Yannis Ragousis warned that resistance to the package could lead to early elections.

“Anyone who drives the nation towards elections now will be effectively giving it the last push over the cliff,” he told the Realnewsnewspaper.

The Greek and European authorities fear that such an eventuality would disrupt plans to settle the country’s debt situation this month. In addition to the €12 billion loan, the country is also in talks about a second bailout plan to overcome its likely exclusion from private debt markets next year.

The situation in Athens is being watched closely in Brussels and other European capitals as EU finance ministers are awaiting political approval of the measures by Greece before they decide to release the next €12 billion in bailout aid to the country.

The ministers meet on June 20th in Luxembourg, three days before EU leaders take stock of the Greek bailout at a summit meeting in Brussels.

Crucial to that engagement are preparations for a request to the country’s private creditors to relieve some of the financial pressure on Greece by rolling over or renewing their existing debt in the country when it falls due.

This is crucial for German chancellor Angela Merkel, whose government is likely to hand down its preliminary assessment of the latest Greek recovery plan later this week.

Meanwhile Greece’s labour minister has said thousands of Greek families have been receiving pensions in the name of people long dead.

Louka Katseli said checks had revealed that about 4,500 deceased civil servants had continued getting their pension cheques, costing taxpayers more than €16 million a year.