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Europe

Parliament begins debating austerity plan

Text by News Wires

Latest update : 2012-02-12

Thousands of protesters were expected to surround Greece's parliament on Sunday as it makes a "historic" decision on whether to pass another round of tough austerity measures. Approval would secure the country 130 billion euros in aid.

AFP - Greece's parliament will on Sunday decide whether to impose another round of swingeing austerity measures on its increasingly angry population, in return for fresh international aid.

If Prime Minister Lucas Papademos gets his way, the country's deputies will authorise him to agree the cuts required to obtain a second massive bail-out from the EU and IMF, to the tune of 130 billion euros ($171 billion).

But they also have to approve moves to recapitalise Greek banks, which may involve a degree of nationalisation if they cannot get sufficient private money.

And they must back a bond swap which, after long and tortuous negotiations, has finally been agreed with private creditors.

That is designed to wipe out around 100 billion euros from Greece's 350 billion euro debt, reducing the country's massive debt burden to 120 percent of GDP.


If deputies reject the package however, Greece will not get the money it needs to stave off bankruptcy on March 20, when it has to repay nearly 14.5 billion euros in maturing debt.

Papademos on Saturday urged the parliament to pass the painful austerity measures demanded by creditors, warning of "economic and social catastrophe" if it doesn't.

Hours after thousands of protestors, watched over by riot police, demonstrated in Athens against the further belt tightening, Papademos insisted that the alternative, a default, was far worse.

"The Greek parliament is asked to take a historic responsibility, examine and authorize the new economic programme of Greece, the pre-condition for financing the country over the coming years," he said.

The two parties in the ruling coalition, the conservatives and the socialists of PASOK back the package -- though two socialist junior ministers and four members of the far-right LAOS party quit the cabinet in protest.

But the proposed austerity measures drawn up to make the cuts required by the European Union and the International Monetary Fund will heap more hardship on ordinary Greeks already suffering from the crisis.

They involve a 22-percent cut in the minimum wage (32 percent for anyone under 25); deregulating the labour market to make it easier to lay off workers; and a package of tax and pensions reforms that have provoked a wave of protest.

The country's unions have called a fresh protest on Sunday in front of the Greek parliament to protest what they say is the blackmail being imposed by the international troika of the EU, the IMF and the European Central Bank.

Thousands of demonstrators are expected to surround the parliament at 5:00 pm (1500 GMT) as deputies consider what Papademos said in a televised address late Saturday was their "historic responsibility".

In his address, Papademos spelled out the consequences if deputies refused to bite the bullet and approve the fresh package of cuts.

"The social cost of this programme is limited in comparison with the economic and social catastrophe that would follow if we did not adopt it," he said.

The state would be unable to pay salaries, pensions or even maintain basic services such as hospitals and schools, he warned.

And in a speech on Friday, he spelled out the consequences of a default.

"It would create conditions of uncontrolled economic chaos and social explosion... sooner or later, (Greece) would be led out of the euro," he warned.

Date created : 2012-02-12

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