Bloomberg
Papandreou, Samaras Urge Austerity to Avoid Default Chaos
February 11, 2012, 10:15 AM ESThttp://www.businessweek.com/news/2012-02-11/papandreou-samaras-urge-austerity-to-avoid-default-chaos.html
By Marcus Bensasson, Maria Petrakis and Natalie Weeks
(Updates with comment from Venizelos in 15th paragraph. For more on debt crisis, see EXT4.)
Feb. 11 (Bloomberg) -- George Papandreou and Antonis Samaras, leaders of Greece’s two largest parliamentary parties, demanded support and discipline from lawmakers to back budget cuts to secure international aid and prevent a collapse.
The interim government of Prime Minister Lucas Papademos yesterday approved deeper budget cuts needed to gain a second package of aid, preparing the way for a parliamentary vote in Athens tomorrow. The measures equal about 7 percent of gross domestic product over three years and include a debt swap that would shave 100 billion euros ($132 billion) off more than 200 billion euros of privately-held debt.
“We have to sacrifice a lot so as not to sacrifice everything,” Papandreou, leader of the Socialist Pasok party, told lawmakers in Athens. “We must speak honestly and tell Greeks what bankruptcy really means. It means chaos.”
Police in Athens scuffled with protesters yesterday as unions started a 48-hour strike against the austerity measures demanded by the so-called troika of international creditors monitoring Greece’s progress. The Cabinet backing capped a week of tension as European Union and International Monetary Fund officials argued with Greek officials over the conditions to secure the 130 billion-euro ($172 billion) rescue package.
Looting and Chaos
Antonis Samaras, the leader of New Democracy, the second- biggest party, said a write-off of debt through a voluntary exchange will allow the country to move away from the precipice. It was self-evident that party discipline would be imposed during the vote on a second financing package, he said, adding that elections are needed as soon as financing is secured, as previously agreed on by party leaders.
“It won’t solve the problem, but it will help,” Samaras told party lawmakers today in Athens, in live comments on state- run NET TV. “It distances us from bankruptcy, looting, the chaos that would follow.”
With only weeks remaining before a 14.5 billion-euro bond payment on March 20, five ministers resigned from Papademos’s interim government yesterday in two hours. The measures are aimed at budget cuts totaling 1.5 percent of GDP this year, and include a 22 percent paring of the minimum wage, lower pensions and immediate job cuts for as many as 15,000 state workers.
Laos Rejects
“It should be evident that whoever disagrees and doesn’t vote for the new program cannot remain in this government,” Papademos told his ministers. Failure on the package threatens 11 million Greeks with a default that would halt the payment of wages and pensions and shut schools, hospitals and businesses, he said. The vote amounts to a ballot on euro membership, Finance Minister Evangelos Venizelos said today.
The Laos party, which has 16 members in the 300-seat parliament, said it would oppose the plan. The party’s four ministers in the Papademos government resigned yesterday.
“What has particularly bothered me is the humiliation of the country,” George Karatzaferis, the head of Laos, said yesterday. “Clearly Greece can’t and shouldn’t do without the European Union but it could do without the German boot.”
The parties that support Papademos’s government are meeting ahead of the parliamentary votes. Lawmakers will convene from Pasok and New Democracy, which leads in opinion polls before elections due as soon as April. A number of Pasok deputies have threatened to vote against the bill.
Missing Targets
German Finance Minister Wolfgang Schaeuble told lawmakers in Berlin yesterday that Greece was missing deficit goals and needed to do more to meet its commitments. Schaeuble, briefing lawmakers in Berlin on troika estimates relayed to the Brussels meeting on Feb. 9, said current plans would leave Greece’s debt as high as 136 percent of GDP by 2020, according to two people in the meeting. That compares with the 120 percent foreseen in the second bailout. Debt was about 160 percent of GDP last year.
The emergency euro-area talks broke up late on Feb. 9 with Luxembourg Prime Minister Jean-Claude Juncker saying Greece must turn its budget cuts into law, flesh out 325 million euros in spending reductions and have major party leaders sign up to the program so they don’t retreat after elections. Another extraordinary meeting was set for Feb. 15.
Resolution of the aid talks, which have dragged on since July, would allow Greece to make the March bond payment and contain the threat that speculators will target debt-saddled nations including Italy and Portugal.
Default Talk
Venizelos said today that Greece will default without an agreement and euro-area finance ministers must approve the Greek accord on Feb. 15. Officials from euro countries will assess Greece’s “prior actions” that need to be completed before the second rescue package can be approved by teleconference on Feb. 14, he said.
The strike called by the private-sector GSEE union shut down schools, government services, and some public transit for the second time this week.
“They want to privatize the entire country,” Ploumitsa Triantafillopoulou, 42, who works for a group that promotes day- care facilities, said yesterday in an interview. “All of us here we will lose our jobs. They don’t care for us. They don’t care for the people of Greece.”
Hardline Stance
Europe’s hardline stance follows more than two years in which Greece failed to carry through promised reforms to tackle its uncompetitive economy and meet aid terms. The country blamed its shortcomings on a deepening recession now set to worsen with figures this week showing unemployment jumping to 20.9 percent in November and industrial production declining.
Bondholders met separately in Paris on Feb. 9 to discuss accepting an average coupon of as low as 3.6 percent on new 30- year bonds in a proposed debt swap. An agreement would slice 100 billion euros off more than 200 billion euros of privately-held debt. Venizelos said the country needs to make a formal offer to private bondholders for a debt swap by February 17.
--With assistance from Simon Kennedy in London, Rainer Buergin and Brian Parkin in Berlin, James Hertling in Paris and Tom Stoukas, Eleni Chrepa and Antonis Galanopoulos in Athens, Editors: Jonas Bergman, James Kraus
Nessun commento:
Posta un commento