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Greece's far-right party rejects bailout agreement

Text by News Wires

Latest update : 2012-02-10

The leader of the far-right party in Greece's coalition government said Friday he could not vote for the 130-billion euro bailout agreement the country needs to avoid going bankrupt. The bill could still pass without the LAOS party's support.

AFP - Greece's ruling coalition reeled on Friday amid protest violence, with the far-right party that supports the government rejecting tough conditions demanded by the eurozone for a debt rescue.

As the prospect of a chaotic default reappeared over the country, far-right leader George Karatzaferis said his deputies would not approve a new round of wage and pension cuts heading to a parliament vote on Sunday.

"We are not going to vote," Karatzaferis, leader of the small LAOS party, told a news conference, adding: "Humiliation was imposed on us. I do not tolerate this. And I do not allow it, no matter how hungry I might be."

Blasting Berlin's line on debt, Karatzaferis said, "Greece must not and cannot be outside the EU. But it can do without the German boot."

Greece, running out of time to finalise additional budget cuts to secure a eurozone bailout worth 130 billion euros ($171 billion), was hit by a 48-hour general strike on Thursday.

The country risks bankruptcy on March 20 when it must repay nearly 14.5 billion euros ($19 billion) in maturing debt, if it does not get financial assistance.

Prime Minister Lucas Papademos summoned a cabinet meeting later on Friday as clashes erupted on the sidelines of union demonstrations against the new cuts, which had caused a junior labour minister to resign on Thursday.

Television footage showed youths in hoods and motorcycle helmets breaking masonry around central Syntagma Square and throwing stones at police, who responded with bursts of tear gas. At least one person was injured.

Eurozone finance ministers on Thursday delayed a decision on a new bailout, giving Greek officials less than a week to meet conditions in exchange for 130 billion euros ($172 billion) in aid.

The far-right has 16 deputies in the 300-seat chamber, and although several lawmakers from other parties have also declared their opposition to the new cuts, the other two coalition parties have enough support to secure passage on Sunday.

Eurozone ministers demanded that Greek lawmakers formally approve the measures, which include additional structural spending cuts of 325 million euros for 2012.

They also want a written pledge from coalition leaders that they will implement the reforms, Eurogroup chief Jean-Claude Juncker told a news conference in Brussels.

If those conditions are met, the Eurogroup would meet again on Wednesday, he said.

The hard line in a new five-day deadline from the eurozone was clear: "The Greeks have to help themselves. There is no other way," French central bank governor Christian Noyer told Europe 1 radio.

But Greek unions went ahead with the general strike against what they describe as "barbaric" wage and pension cuts. This backs up a 24-hour general strike held three days ago. More protests are planned for the weekend.

"The measures they are trying to sign and ratify will be the tombstone of Greece," said Nikos, a demonstrating pensioner.

"The people must take matters into their own hands," added Constantinos Amonas, a plastics factory worker. "They should not wait, they should not be fooled by the political parties," he added.

Greece on Thursday had announced a last-minute agreement among coalition parties on alternative ways of finding budget savings demanded by the European Union and International Monetary Fund.

But it turned out that in the eyes of eurozone finance ministers there was still a shortfall, and they were not prepared to accept a "general agreement" by Greek politicians.

Instead the eurozone wants cast-iron commitments on the numbers.

Financial markets reacted negatively to the latest developments, with stock exchanges falling in Asia and Europe. Sentiment on the oil market was also hit.

The tough position by European leaders echoes a change recently in the tone of comment which until now held that a departure of Greece from the eurozone could not be contemplated.


Greek Finance Minister Evangelos Venizelos told reporters in Brussels that Greece's place in the eurozone was in the hands of the country's conservative party, a senior coalition partner alongside his socialists.

"It must decide -- if they want (Greece) to stay in the eurozone, they have to say so clearly. If they don't, then they have to say that clearly as well," Venizelos said.

EU economic affairs chief Olli Rehn said eurozone partners were "seriously considering" opening an escrow account for Greece, which would block a portion of state revenues to guarantee the repayment of bailout loans.

But whether a rescue package consisting of 130 billion euros from the European Union and International Monetary Fund and a 100-billion-euro cut in debt owed to private creditors will resolve the crisis "is a very open question," Berenberg Bank chief economist Holger Schmieding said.


Date created : 2012-02-10


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