Greek Prime Minister George Papandreou vowed to push through a further round of austerity measures in the face of public anger, appealing to European leaders to help cut Greece’s debt burden at a weekend summit.
Opening a parliament debate in Athens on the government’s planned tax increases and cuts to pensions and wages, Papandreou said that a 48-hour walkout by workers in schools, hospitals and on public transport that began today “will not help Greece,” contrasting the strikers with his government’s efforts to help the country back to economic growth.
“Greece is being held hostage by strikes and protests,” Papandreou told lawmakers late yesterday. “This government has been fighting for two years to save the country and still has much work ahead,” he said. “We will give battle and we will win.”
Papandreou is risking social unrest as he banks on Greek lawmakers to push through additional austerity in an Oct. 20 vote to continue receiving international support under a 110 billion-euro ($151 billion) bailout negotiated last year. With Greece’s debt-reduction targets slipping as the cuts bite, EU leaders are preparing to meet on Oct. 23 to reopen the terms of a second bailout three months after it was sealed as part of a package meant to end the debt crisis.
German Chancellor Angela Merkel cast doubt on the progress made with five days to go, telling reporters in Berlin yesterday that the weekend summit, while an “important step” that will make a “clear commitment” to defending the euro, will not be the last. “Further steps will still follow,” Merkel said.
‘Great Uncertainty’
Papandreou urged EU leaders to end the “great uncertainty” over efforts to stamp out the crisis two years in. “Europe hasn’t been able to halt the crisis,” he told his ruling Pasok party lawmakers. “We have to achieve the relieving of the debt burden which is weighing on each Greek.”
The measures have provoked a wave of strikes by public- sector employees who have shut down government services and buildings in protest at the bill. Municipal garbage collection workers were ordered back to work yesterday by an executive decree to clear more than a week’s worth of refuse piled up in the streets.
Successive rounds of tax increases and cuts to wages and pensions have deepened a recession now in its fourth year, with the economy set to contract 5.5 percent this year and 2.5 percent next, according to the 2012 budget. The unemployment rate reached 16.5 percent in July, data released yesterday by the Hellenic Statistical Authority showed.
‘Opened Wounds’
Greece’s measures have “opened wounds on the body of society,” which a “national struggle” against tax evasion would help close, Finance Minister Evangelos Venizelos told President Karolos Papoulias during a meeting earlier yesterday, according to an e-mailed transcript.
Negotiations will begin today ahead of an Oct. 21 meeting of euro-area finance ministers that will start a weekend of debt-crisis consultations, Venizelos said.
“If Greece can dramatically reduce its debt burden and interest payments, that may well mean that it needs to implement slightly less austerity in the near term,” Ben May, an economist at Capital Economics Ltd. in London, said in a Bloomberg Television interview. “It certainly won’t solve all of Greece’s problems and it will have to continue reduce its deficit over time, but it might make that process a bit more manageable and less painful.”
