Europe

Home page

Europe

Papandreou faces party revolt over Greek plan

08 June 2011 22:46 (UTC +04:00)

Baku â€“ APA. Greek Prime Minister George Papandreou will strive on Wednesday to stem an outbreak of unrest in his party over the social cost of a new bailout after data laid bare the depth of the country’s economic crisis, APA reports quoting â€œReutersâ€.
Discontent in the ruling socialist party (PASOK) could yet spill over into a full-scale parliamentary rebellion and tens of thousands are protesting regularly in central Athens against waves of austerity demanded by the European Union and IMF, as well as corruption and state mismanagement.
Unemployment climbed to 16.2 percent in March, the highest in the euro zone after Spain, while industrial production tumbled 11.0 percent year-on-year as Greece suffers its third year of recession, major public spending cuts and higher taxes.
Labour Minister Louka Katseli said PASOK deputies wanted to know whether the sacrifices Greeks have made under the original 110 billion euro bailout, agreed with the EU and IMF a year ago, were bearing any fruit.
"The deputies are demanding that the burden should be shifted to those who can withstand it better," she told Mega TV.
Papandreou will meet the political council of his PASOK party at 5 pm (9 a.m. ET), hoping to win their backing for a tough medium-economic plan. This lays out years of austerity and faster privatization, agreed with the EU and IMF last Friday to secure a second financial rescue in just a year.
A Greek newspaper reported the government was considering dropping one element of the plan, cutting income allowances, to appease the backbenchers. However, the lost revenue would have to be recouped elsewhere.
Until now dissent has been muted among the ruling Socialists. But Greeks have staged nightly protests for a fortnight in the capital’s Syntagma Square to hurl abuse at the parliament building, with numbers hitting over 80,000 on Sunday.
Many PASOK backbench members of parliament appear to be taking fright. Finance Minister George Papaconstantinou suffered a roasting on Wednesday when he presented the medium-term plan to senior party members at a meeting that lasted about 12 hours.
"EMPTY BANKS, FULL SQUARES"
Greece, which has a huge budget deficit but has been frozen out of debt markets for a year, seems to have no alternative but to depend on the EU and IMF and accept their demands.
One PASOK lawmaker, Paris Koukoulopoulos, accepted that the minister’s report on achievements so far had been sincere. "But what’s important is that we have emptied the banks of deposits and filled the city squares with people," he said.
Newspapers reported that Papandreou had ordered his finance minister to take the attacks on the chin and allow the backbenchers to vent their rage, in the hope that they will cool down eventually and vote for the plan in parliament.
The government wants parliament to decide on the plan before the end of this month and a rejection would probably provoke early elections. With PASOK’s opinion poll lead vanishing, many of its MPs would risk losing their seats, meaning that they may have second thoughts about voting against the plan.
Already the timetable for turning the plan into law has slipped by 24 hours as debate rages in PASOK.
The council meeting should have been held a day earlier, allowing the cabinet to sign off on the plan on Thursday. The cabinet -- which itself has already spent 9-1/2 hours debating the austerity steps -- is now due to vote on them on Friday.
Financial daily Imerisia reported that the finance ministry was considering scrapping a plan to lower the threshold under which Greeks pay no income tax from 12,000 euros. This would draw many of the low-paid into the tax net.
But it was looking for other ways to raise the tax income needed to shrink the deficit. One idea was a 3 percent one-off levy on incomes above 6,000 euros a year.
However, there was no easy way out. "If this proposal is adopted, more than five million taxpayers will be burdened by extra tax this year," Imerisia said in its unsourced report.
Nikos Magginas, an economist at National Bank, said the problems at home were undermining stronger exports. "Industrial output kept deteriorating ... as the impact of extremely weak domestic demand offset the benefits from the satisfactory performance of exports," he said.