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Greece fails to agree austerity measures

Text by News Wires

Latest update : 2011-05-28

Greece's prime minister failed to persuade opposition parties Friday to support stricter austerity measures for the indebted country, as the EU and IMF warned they would withhold further financial aid until consensus is reached.

REUTERS - Greek Prime Minister George Papandreou failed on Friday to get opposition party leaders to back austerity measures and vowed to do whatever it takes to exit a debt crisis even without their consent. 

The EU warned Greece was running out of time but Papandreou said not all hope was lost in getting political backing for debt-cutting measures, the kind of consensus achieved in Portugal and required by Euro zone policymakers before handing Athens more cash to stay afloat.
“I am open to any proposal and cooperation,” Papandreou said in a televised address to the nation after political leaders turned down his call for unity. “We must end all talk and disastrous scenarios about our country leaving the euro zone.”
Friday’s 5-hour meeting, chaired by the Greek president, was the latest effort by Papandreou to get his opponents on board after inconclusive one-on-one talks earlier this week. After leaders from across the political spectrum rejected his call, it was not yet clear whether fresh meetings would be sought.
The European Commission’s top economics official said time was running out for Greece to back a 110-billion euro ($155-billion) bailout deal that rescued it from bankruptcy last year.
“We expect that the efforts towards a cross-party agreement to support the EU-IMF programme will continue. An agreement has to be found soon. Time is running out,” EU Economic and Monetary Affairs Commissioner Olli Rehn said in an emailed statement.
Jean-Claude Juncker, head of the euro zone finance ministers’ group, alarmed investors on Thursday by saying the International Monetary Fund may withhold its next slice of aid to Greece if conditions are not met.
The European Union is trying to reconcile conflicting demands and hopes the IMF can show “pragmatic flexibility” in disbursing the June tranche of emergency loans, a senior euro zone official said on Friday.
Rejecting consensus
Opposition parties reject Papandreou’s latest austerity package on the grounds that the belt-tightening agreed is choking the life out of the economy.
“We don’t agree with a policy that kills the economy and destroys society,” conservative opposition leader Antonis Samaras said after the party leaders’ emergency meeting.
The Athens stock exchange reversed gains on the failure to get a deal, closing 1.7 percent lower on the day by 1536 GMT, with banks down 2.3 percent.
Athens kick-started a stalled privatisation programme on Monday and promised tougher austerity measures and tax hikes to meet EU/IMF conditions for the next loan tranche.
Analysts said early elections could be on the cards after the attempt to reach consensus on the measures failed.
“After failing to secure consensus, Papandreou will go ahead and implement reforms on his own as rapidly as required. But if there are violent reactions, if we get burning cars on the streets, then he will call elections the next day,” said Dimitris Mavros, head of pollsters MRB Hellas.
Papandreou, who has a comfortable majority in parliament but has seen his party’s popularity decline, said he was determined to tackle the task without wider support if he had to and ruled out snap elections before they are due in 2013.
Thousands of protesters gathered in central Athens for the third day on Friday, prompted by a Facebook campaign and chanting before parliament “Thieves! Thieves!”, mirroring anti-austerity rallies in Spain.
Samaras, whose party voted against the bailout deal struck last year, said he asked for tax cuts but Papandreou, whose government has increased VAT from 19 to 23 percent last year and hiked income taxes, rejected his proposal.
Papandreou said he had suggested to other parties that they jointly negotiate tax policy with creditors, signalling some flexibility on the issue.
Samaras’ conservatives have 86 seats in the 300-seat parliament, where the ruling socialists have 156 MPs.
Also participating in the meeting were the leaders of the communist KKE party, which often boycotts such events, the far-right LAOS party and the Coalition of the Left. Their leaders said they would not be “blackmailed” into accepting the government’s austerity measures.
In Athens, EU and IMF inspectors are examining new Greek measures before granting the next 12 billion euro tranche of the bailout. Without it, Greece will be unable to cover pressing funding needs of 13.4 billion euros and will go bust.
Greek government officials have said that Athens has enough cash to cover its needs until mid-July.


Date created : 2011-05-27


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