Mon, May 28, 2012, 12:39 PM EDT - U.S. Markets closed for Memorial Day

Greek premier defends bailout deal, painful cuts

Greek prime minister defends bailout deal, painful cuts on eve of crucial parliamentary vote

ATHENS, Greece (AP) -- Warning of a "catastrophe" that would leave Greeks subsisting on food stamps and the country wallowing in bankruptcy, Greek leaders urged lawmakers Saturday to pass more painful spending cuts on the eve of a crucial vote to qualify for a massive bailout.

In a televised address Saturday, Prime Minister Lucas Papademos defended the thousands of job cuts, drop in the minimum wage and other austerity measures that would earn the country a euro130 billion ($171.6 billion) bailout deal and stave off bankruptcy.

"The deal will ensure our country's future inside the euro. ... A bankruptcy would lead to uncontrollable economic chaos and social explosion," Papademos said. He added that a bankruptcy would lead to Greeks losing their savings; the state being unable to pay salaries and pensions; and shortages in import items such as medicines, fuel and machinery.

He and the leaders of parties backing Greece's coalition government — socialist George Papandreou and conservative Antonis Samaras — as well as Finance Minister Evangelos Venizelos, a socialist — used stark images of a country under bankruptcy to convince the public and, more importantly, persuade Parliament members debating the measures to vote for the deal.

"If we do not dare today, we will live a catastrophe," Papandreou said during a parliamentary debate session.

"What do you want, a country where food will be handed out with food stamps and where we will have no fuel?" Samaras angrily told a dissenting deputy.

"The battle is now. The war is now. If we falter, nothing will be left standing...The real dilemma is between painful measures and crushingly painful ones," Venizelos told socialist lawmakers.

Several dissident lawmakers were unconvinced. At least 13 conservatives and seven socialists declared they would not vote and two more socialist deputies resigned, bringing the total to three. Their replacements will be seated Sunday.

Typical of the dissidents' arguments was the one put forward by veteran socialist Vasso Papandreou (no relation to the socialist leader), a former minister and member of the European Commission. "If we say we do not pay the bond that matures on March 20, all (Europeans) will rush to find a solution," she said.

Debt-stricken Greece does not have the money to cover a euro14.5 billion bond repayment on March 20, and must reach a vital debt-relief deal with private bond investors before then. The country's woes have threatened its future in the 17-country zone that uses the euro currency.

The Europeans are waiting to see Greece finally act on their commitments.

"If the right course is now set sustainably in Athens, Greece can count on our support — but only then," German Foreign Minister Guido Westerwelle was quoted as telling the weekly Der Spiegel.

"There can no longer be advance payments," he said, according to the report. "Only actions count now."

Westerwelle said that the "clear aim" is to keep Greece in the eurozone. But he insisted that "it is not enough to approve reform programs; it is necessary to begin the implementation of the reforms without delay. Not sometime, but now."

The austerity measures included in the bailout deal, including the layoffs of 15,000 workers and a 22 percent drop in the minimum wage and pension cuts, have set off street protests and led to the resignations of half a dozen Cabinet officials.

Lawmakers are wary of voting for the measures and the prospect of more to come, along with the job cuts and the shutdown of several state agencies, including welfare agencies. The demands of creditors, including the European Union and the International Monetary Fund, have caused one of the original coalition parties — the populist right-wing Popular Orthodox Party — to quit the government and withdraw its four members from the cabinet. Two more cabinet members, both socialist deputy ministers, have also quit. They cited their disagreements with parts of the austerity package.

Both Papandreou and Samaras made it clear that dissenters are not welcome in the party. Samaras threatened to expel those who did not vote in favor and exclude them from the lists of party candidates in the next election. "I want to make it absolutely clear ... rebels or 'bravehearts' have no place in (the party's) candidate lists," he said.

"I call on you to fall in line and vote for this difficult and painful deal that will help (the country) stand on its feet. Whoever has a conscience problem can resign," Papandreou told his lawmakers.

Together, the socialists and the conservatives have 236 deputies in the 300-member parliament.

Parliament will vote Sunday on emergency legislation approving the new bailout and a debt-swapping deal with private creditors. Further legislation detailing the measures demanded by, and agreed with, Greece's public creditors, the EU and the IMF, will be up for vote a few days later. The exact time has not yet been set.

Samaras also called for an immediate election once the bond swap deal with Greece's private creditors is over, saying he would not agree to the extension of the mandate of the coalition government beyond that date. Elections are normally due in October 2013. The bond swap deal with Greece's private creditors is expected to help Greece get rid of some euro100 billion of its debt. The bond swap must be completed before March 20, the redemption date for euro14.5 billion worth of bonds. Elections could then be held about three weeks later than that, at the earliest.

While the two parties met, union leaders staged a demonstration outside Parliament that attracted about 4,000 protesters, while up to 6,000 policemen patrolled the streets of Athens. The protest ended with some scuffles that left two people injured when police tried to clear the street in front of Parliament. Authorities are bracing for a much larger, and possibly violent, one on Sunday evening.

Another 4,000 turned out for a peaceful demonstration in Thessaloniki, Greece's second-largest city.

___

Costas Kantouris in Thessaloniki and Geir Moulson in Berlin contributed to this report.

 

55 comments

  • Outsider  •  Lawrence, Massachusetts  •  3 months ago
    How bad will it be if Greece leaves Euro? Or does it really solve the problem to get this 130B or just postpone the crises? My guess is that it will impact many (very high level) Euro politicians so let the volcano to erupt later when they are off the stage.
  • PENY STOK  •  3 months ago
    File bankruptcy, its the best option for the Greek's independance!
    • wjmdurham 3 months ago
      Yeah, far better to be free without heat and electricity and have food shorteges than have to obey those who by the fact they have the ability to fund your recovery have proven they are better managers than yourself.
  • Ted  •  Solito, Aruba  •  3 months ago
    Lucas Papademos will not be around in 6 months. He will go down in history as a puppet for the EU Union and IMF and probably never to be heard from again.
  • Pointandclique  •  3 months ago
    Why wasn't everyone condemning the banks and Germany when Greece was borrowing all that money to sustain their cost of living? Was anyone saying, "No, we can't afford this, we'll have to wait for another time."? Don't you just hate banks for forcing money down people's throats? The nerve of them.

    Is the US gonna villify China when its time comes?
  • the doctor  •  Los Angeles, California  •  3 months ago
    I like the socialists that claim the european creditors will come up with something different when they default, its the same attitude the UAW had when GM was faced with bankruptcy.The best thing that can happen is for them to default, europe is tired of their games already. Then they will find that they cant buy oil or gas, that food imports stop, and that europe doesnt mind if they disappear.
    • Jack 3 months ago
      I agree with you that the best thing would be for them to default, but the EU has always been the one in the lead of this supposed "agreement" they have been trying to shove down the Greek peoples throat.
  • Kim  •  Sydney, Australia  •  3 months ago
    By now I would imagine all those FAT cats in Greece would have loaded loots in their Swisss banks.
    That is why they are proposing cut cut cut. It is somebody else life.
  • QL  •  Beijing, China  •  3 months ago
    The Greek public do not understand the consequences of default. They still think they can act like deadbeat and walk away from their liabilities. The reality is they cannot. In a default, they will get NO pension payment, public workers will get NO paychecks, savings in banks will be gone, and their government will be shut out of capital market for decades. The austerity they are protesting against will look like heaven compared to what they are heading to in a default. The Germany and other European countries must ring fence themselves right away. With the proper measures, they can afford letting Greece fall in chaos. The sooner Greeks see that the sooner they will act like grown ups. In the worst case, let the Greeks go to hell and set an example for others.
    • DDM 3 months ago
      It's not quite true that they will be as bad off as you say! They will still have whatever Taxes they can collect from their population but this will still give then far less to spend than they would have under the ECB/IMF bailout. Their austerity program will have to be much more severe. The good news is that they will be forced to restructure their economy much quicker and not be able to blame others.
    • WallStPirate 3 months ago
      Sounds great in theory but their currency will be worthless, inflation will hit 1000% oil will. Be 20 per liter, imports will only be sold for hard cash, Euro, dollar or gold.
    • wjmdurham 3 months ago
      The taxes they can collect from their population? They will have over half the population unemployed. And few people willing to invest to create jobs. With massive unemployment who will pay taxes? Most young will leave Greece for other countries and a better life elsewhere.
  • monger  •  Panama City Beach, Florida  •  3 months ago
    Greek now---we are going down the same road in the US
  • Vkf  •  Athens, Greece  •  3 months ago
    Save your money tomorow Greece will default!
    • Nicholas 3 months ago
      Bail-out OR not Greece is broke.Your corrupt politicians and the crook banksters are kicking the can down on the road.Greece needs political and economic reforms to stay in the euro-zone....
    • Vkf 3 months ago
      I don’t give a #$%$ Greece has resources and man. They just trying to exploid the situation, the same situation that every country is, banks of Greece are not Greek are British since the liberation… and now want to became Germans for the oil, everything is a lie
  • Ted  •  Solito, Aruba  •  3 months ago
    There will be a rancid smell hanging over any acceptance of this bailout plan. Its simply doomed to failure and everyone knows it. Why are they pressing for these untenable cuts?
  • A Yahoo! User  •  Peoria, Illinois  •  3 months ago
    I've got it! Let's send to "occupy" people to Greece. That will really confuse them!
  • MRD  •  3 months ago
    Accept the cuts and make more later or country will have a revolution.
  • monger  •  Panama City Beach, Florida  •  3 months ago
    Someone must pay for all the free things we give away----most people don't realize that there must be worker bees for all the freeloaders---Greeks are a prime example ----you must produce something for your work----the woker bees pay the taxes that pay all those goverment jobs---when you get more goverment jobs then worker bee jobs---then the spiral down begins.
  • Old Bat  •  3 months ago
    Easy answer to the problem. Spend more, More, MORE. Give out more welfare. Put everyone in a public job at high pay. If they need help implementing these things, send them Obama. He would put the Greeks to shame with the way he can hand out money and destroy countries.
    • George 3 months ago
      good idea. the WH idiot has screwed us up enough.
  • Asian Dragon  •  3 months ago
    THE YEAR 2012 is a new chapter for Greece and Europe. Accordingly, Greece will setback for another 100 years of “backwardness”, given its arrogance in conjunction with its ignorance. Consequently, Europe will crawl like a snail for some 30 years due to its failed policies. Never before has EU managed itself prudently in dealing with Greece (unable to control, govern and discipline Greece by a common sense if not a “decisive” action – to kick Greece out Day-One).

    It is unfortunate that the Greek’s Unpaid Bill of 600+ Billion Euros (a tiny nation with mountain of debt) has severe consequences on every corner of the world. Unquestionably, it already created huge negative effect on the “Sovereign Bond Market” across Europe.

    Indeed, the Greeks have been relentlessly cheating the world for century. Sadly, Greek governments had been found to have consistently and deliberately misreported the country's official economic statistics to keep within the monetary union guidelines. Equally ridiculous is that Europe today is still opting cowardly to dance with Greece.

    Why do the Greeks continuously strike and what are they upset about? Where do the Greeks think the money (Free Lunch) to pay them monthly (Enlightenment Programs) come from? Bailout Funds are from members of EU, IMF + CHINA.

    Both recognizing and admitting that their government has no money, what are the options for the Greeks? Throw stones on the street and destroy buildings?
  • wjmdurham  •  3 months ago
    What is to defend? Either they get rid of a quarter of the public service now and reduce the wages of the ones left by 20% and get the bailout and save the rest og]f the jobs ( at least for the moment) OR lose the bailout and lay off three quarters of the public service and cut the wages of the remaining by 50%. Seems a choice hat even the stupidest socialist could make right.
  • boondocker  •  Auckland, New Zealand  •  3 months ago
    May be, just may be the Greeks have the light! The sooner changes take place the sooner the economy will sart to recover.
  • Loa  •  New York, New York  •  3 months ago
    Bansters know very well that the system is fragile and ready to collapse, trying very Hard with with the corrupt Wall Street to avoid total chaos, but cannot go against the odds.
  • DougM  •  Roanoke, Virginia  •  3 months ago
    Seems I remember another country called Iceland that defaulted on its debt and I'm pretty certain their people didn't face a catastrophe of epic proportions such as these clowns claim the Greek people will. Also, it seems Iceland came back will all debts paid and doing just fine within 10 years. All lies just to make sure the payoffs from the euro keep coming and keep the country in debt for the next 50 yrs. The people of Greece will struggle worse under this Austerity then they ever would from a default on debt.
  • JP  •  Surfside, California  •  3 months ago
    Greeks are anti American and anti Capitalist. Now they will pay for their freeloading socialist PONZI scheme.
 
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