Greek rebel lawmakers may block austerity
A top Greek minister warned that rebel lawmakers may yet block reforms demanded by international lenders, even though parliament should back an overall austerity package in the coming week to prevent the nation going bankrupt.
Adding to the Socialist Prime Minister George Papandreou's dire problems, the conservative opposition rejected on Sunday appeals from the government and senior European Union politicians to do its duty and support the medium-term plan.
Parliament is due to start debating on Monday the program of tax increases and spending cuts worth 28 billion euros over five years. Papandreou needs parliamentary approval this week to secure the next payment under a 110-billion euro ($156 billion) EU/IMF bailout.
In an interview published on Sunday, Deputy Prime Minister Theodor Pangalos was optimistic about winning the first round of general votes on tax and spending targets plus the creation of a privatization agency, despite discontent within his PASOK party.
But he was more cautious about whether the government could push through further enabling legislation on individual budget measures and privatization of specific state assets.
"I think the package of short and medium-term measures with which we basically hope to establish the framework to undertake reforms will be approved without difficulty," Pangalos told Spanish newspaper El Mundo in an interview published on Sunday.
However, he said approval of specific laws to enact fiscal reforms and privatizations of public companies may be more difficult to achieve. "That's where we may have problems. I don't know whether some of our Members of Parliament will vote against it. It's possible," he said.
Without the money from the IMF and European Union, Greece faces the prospect next month of becoming the first euro zone country to default, sending shockwaves through a fragile global financial system.
But many ordinary Greeks, who have lost jobs or seen their real income decline by nearly one-fifth over the last two years, have reacted angrily to measures they say fail to target wealthy tax evaders who they regard as responsible for Greece's plight.
Papandreou's PASOK party has seen its slender majority whittled down by five defections over the last 13 months, leaving it with 155 seats in the 300-member parliament.
Two of its legislators have already announced they will not support the deal in the coming week, and a third reiterated on Sunday he would do so only if new Finance Minister Evangelos Venizelos gave him assurances.
"I have submitted a 16-point paper to Venizelos... and I expect specific answers, on which (my stance) will depend," lawmaker Panagiotis Kouroublis told state radio NET on Sunday.
Ramping up pressure on the government, unions have called a two-day national strike starting on Tuesday. Many companies, including the main electricity group PPC which is slated for partial privatization next year, have already started rolling strikes.
Pangalos, who after a cabinet reshuffle this month shares his deputy premier's title with Venizelos, said he believed the conservative New Democracy opposition party would vote in favor of some of the measures.
But New Democracy leader Antonis Samaras turned a deaf ear to the appeals from home and abroad to support the package, saying the painful measures would only deepen Greece's worst recession in 37 years.
"You can't ask for more taxes in an already overtaxed country, in a market that has been sucked dry, with economic activity at zero and a huge recession," he said in a statement.
Greek ministers and policymakers had urged legislators to do their duty and approve the austerity package, adding to calls from European leaders to avoid a crisis in the 17-member euro zone.
German Finance Minister Wolfgang Schaeuble urged the Greek parliament to approve the measures, warning that the EU would not relax this condition for the disbursement of the next 12-billion euro aid tranche.
"The stability of the entire euro zone would be in danger and we would need to quickly ensure that the risk of contagion for the financial system and other euro area countries would be contained," he told German Sunday newspaper Bild am Sonntag.
Venizelos, a Socialist party baron given the finance portfolio in the cabinet reshuffle, clinched the agreement of EU and IMF inspectors on Thursday to a package of measures which the government hopes can put its finances back on an even keel after it failed to meet targets under its international bailout program.
The steps include a one-off solidarity levy on income, an increase in heating fuel tax, and the introduction of income tax even for low earners on salaries of between 8,000 and 12,000 euros a year.
Protests were expected later on Sunday in Syntagma square outside parliament, where demonstrators have camped for more than four weeks to show their anger at the government.
[Source: By Daniel Flynn and Harry Papachristou, Reuters, Athens, 26jun11]
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