February 10, 2012

Greece crisis: Strike against Eurozone austerity deal

Greek trade unions have begun a two-day strike to protest against austerity measures approved by politicians under pressure from international lenders.

In Athens protesters are gathering outside parliament, which is expected to vote on the measures on Sunday.

Eurozone ministers have insisted on MPs approving the package of cuts and reforms, before Greece receives 130bn euro ($170bn; £110bn) in bailout funds.

Lenders are also demanding further budget cuts of 325m euros.

A third condition set by the Eurozone ministers is that the Greek coalition gives "strong political assurances" on the implementation of the programme".

Greece cannot service its huge debt, and there are fears that a default could endanger Europe's financial stability and even lead to a break-up of the Eurozone.

The country is already reeling from the effects of an earlier round of austerity that followed a previous bailout. Those cuts triggered widespread unrest and violent protests.

Greece is deep in recession, with unemployment rising above 20%.

For much of the week the Greek political leaders in the governing coalition struggled to agree to another round of austerity measures in exchange for a new bailout package.
They went as far as they could. They agreed to cuts in the minimum wage and the firing of public sector workers but two of the leaders balked at cuts to pensions.
The problem is this - the Greek people overwhelmingly have turned against further austerity. They do not believe it has worked. This is the fifth year that the economy has shrunk. Unemployment for 15- to 24-year-olds has reached 48%. There is a huge increase in the homeless. The signs of a broken society are everywhere.
Even those who want to stay in the eurozone - and the polls suggest that more than 65% still do - believe that the measures demanded by the EU and the IMF are pushing Greece into a cycle of decline.

The unions have condemned the latest proposed cuts as "painful measures" that would create misery.

On Thursday Greece's finance minister and his 16 Eurozone counterparts met in Brussels.

The chairman of the meeting, Luxembourg Prime Minister Jean-Claude Juncker, set out conditions Greece has to meet before receiving the 130bn-euro bailout.

He said the Greek parliament must by Sunday ratify the package agreed by Greece, the European Commission, the European Central Bank and the IMF.
Toughening mood
The BBC's Chris Morris in Brussels says that given Greece's worsening economy, there is concern among European ministers that the overall plan - involving the new bailout as well as an agreement for private banks to write off a substantial chunk of Greek debt - still doesn't do enough to put the country on a sustainable path.

It is the second such bailout and the mood among Eurozone countries appears to be toughening on Greece, our correspondent adds.

While the official view is still that Greece must be saved, he says there is more and more talk on the margins that a Greek default would not be a disaster.

On Thursday Greece's three-party coalition approved a new austerity plan aimed at securing fresh bailout money needed to meet a loan repayment due on 20 March.

The measures includes:

  • 15,000 public-sector job cuts
  • liberalisation of labour laws
  • lowering the minimum wage by 20% from 751 euros per month to 600 euros
  • negotiating a debt write-off with banks.

Juncker: "We do not have all necessary elements on table to take decisions"

Talks broke up without an agreement, but officials later announced that a compromise had been reached.

However it was not clear how the 325m-euro savings would be made.

Greek Finance Minister Evangelos Venizelos, of the left-wing Pasok party, launched an attack on his conservative rival Antonis Samaras after attending the finance ministers' meeting.

Mr Venizelos said his European counterparts "took into consideration that [Mr] Samaras has still not signed" a letter committing to spending cuts and reforms.

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