Greek prime minister outlines programme of state sell-offs and further belt-tightening.
With protests dividing his own party and tens of thousands taking to the streets, Greece’s prime minister, George Papandreou, attempted on Monday to whip up support for a new wave of austerity.
As Athens sold a 10% stake in OTE, the state-owned Hellenic Organisation of Telecommunications, to Deutsche Telekom – launching one of Europe’s biggest privatisation programmes ever – the socialist leader faced what could be his most critical week in office.
Gathering his cabinet on the eve of a crucial meeting of his increasingly fractious parliamentary group, he outlined the formula – a mid-term fiscal plan of state sell-offs, revenue increases and further belt-tightening – he believes will save Greece from insolvency.
Either they backed the programme or the country “sank” in a €340bn (£303bn) debt projected to hit 160% of GDP next year, he said.
Under immense pressure from the EU and IMF – the bodies that bailed Greece out to the tune of €110bn last year – Papandreou is in a race against time to pass the policies through parliament.
With Athens unable to borrow on capital markets because of prohibitively high interest rates, Greece’s international creditors are locked in talks over a new aid package estimated by the German media at €100bn – enough to meet the country’s financing needs in 2012 and 2013.
Lenders have made clear that without the €50bn privatisation drive and further reform, there will be no second bailout.
But with prominent MPs ideologically opposed to the policies – and many seeing default as the only way out – the ruling Pasok party is riven by dispute.
“There is a real risk of internal revolt [within Pasok],” said a senior Papandreou aide. “There is some discussion of the prime minister calling a referendum.”
In the current climate few are convinced that the vote would pass.
Ordinary Greeks say they have already been brought to their knees by a series of unprecedented public spending cuts that have seen wages frozen, pensions dwindling, taxes soar and benefits lost.
Public opposition is such that on Sunday 80,000 protesters converged on Syntagma Square, the site of Athens’ parliament, to denounce the fresh austerity as the equivalent of a “foreign occupation” with many demanding that the measures be put to popular vote.
“If we do what these institutions want there will be no Greece anymore,” complained Elena Christolaki, who at the age of 60 said she was protesting for the first time. “They are demanding that we give up our dignity, sell everything, when it is those thieves in parliament who are to blame.”
With corruption regarded as one of the main reasons for the dire state of the nation’s public finances, Greeks are demanding that parliamentary immunity be lifted and politicians found guilty of transgress be punished in exemplary fashion.
In an increasingly explosive atmosphere, government ministers have launched an offensive against rot in the public sector.
On Monday, Louka Katselli, the labour minister, said an investigation was underway into the 4,500 dead pensioners “still claiming” benefits, and a “suspicious number” of centenarians on pension payrolls.
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