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Today's Top News
Greek Rescue is a Matter of National Survival, says Papandreou
Greece's PM tells opponents of €120bn bailout that the stringent austerity measures are necessary for the 'protection of the country'
The Greek prime minister, George Papandreou, today called the country's austerity programme a matter of national survival as negotiations with the EU and IMF over a potential €120bn (£100bn) rescue package entered their final stage.
After a week in which pressure from the financial markets threatened to destroy the Greek economy and the single currency, the socialist leader insisted that new cost-cutting measures aimed at trimming the budget deficit by 10% by 2013 were essential to avert collapse for the debt-stricken country.
It is expected that details of the rescue, which involves €45bn in loans this year and could reach as much as €120bn, will be announced after eurozone finance ministers meet in Brussels on Sunday.
"Today the top priority is the survival of the nation. This is the red line," Papandreou told parliament. "The economic measures that we have to take are necessary for the protection of our country, our future, for us to be able to stand on our feet," he said, resisting calls from opposition parties to reject the rigorous reforms which will include opening up "closed shop" professions to improve competitiveness.
Other measures expected in the IMF's three-year austerity programme are the end to collective bargaining – bound to cause opposition from Greek unions – a two percentage point rise on VAT and the scrapping of public sector bonuses amounting to two months' extra pay.
Trade unions have pledged to turn traditional May Day celebrations into raucous protests. A general strike – the third this year – has also been called for next Wednesday. "We want to help the country exit the crisis but if the government continues with these policies that hurt workers only, we have no other choice but to oppose them with all our might," said Ilias Iliopoulos, head of the civil servants' union.The measures could be outlined by Papandreou as early as tonight.
Three rounds of previous hard-hitting spending cuts, announced in the six months since the socialists assumed office, have failed to calm markets. Greece's debt-to-GDP ratio is 120% with predictions it could hit 145% without international aid. By 19 May, Athens has to refinance €8.5bn in maturing debt.
Although most Greeks understand the severity of
the crisis, and appear willing to accept some belt-tightening, the
latest measures are widely seen as a step too far. Echoing the public's
growing anger, Alexis Tsipras who heads the radical Left party, lashed
out at Papandreou. He said the reforms would unleash untold misery on
Greece. "These measures will bring disaster to this country," he told
parliament. "Not since the second world war has Greece seen anything as
For more insight, read Mark Weisbrot's latest piece.