Debt-hit Greece yesterday was set to enforce its marching orders from Brussels after EU leaders agreed on a new debt rescue to banish fears of a default that could fatally weaken the eurozone.
The Socialist government of Greek Prime Minister George Papandreou has a week to push new austerity reforms through a divided parliament in the face of protests and resistance from unions who are preparing a 48-hour mass walkout.
After late-night talks between European leaders, European Council President Herman Van Rompuy said the new rescue demanded by the IMF and worried international partners should allow initial “disbursement in time to meet Greece’s financing needs in July.”
That refers to a 12 billion euro (US$17.1 billion) tranche of loans from last year’s 110 billion euro bailout, which Greece needs to avert default next month and which was blocked pending next week’s vote in the Greek parliament.
Papandreou has a five-seat majority in the chamber, but some of his lawmakers have threatened to shoot down the reforms, in particular over a controversial sale of state assets designed to lighten the country’s crushing debt.
Opposition parties also reject the tight economic policy deemed to have killed off Greece’s slim growth prospects, while labor groups are pledging to fight tooth and nail against the privatization drive.
In a bid to defuse public anger toward the political elite, Greek Finance Minister Evangelos Venizelos on Thursday announced an emergency 5 percent tax on deputies, elected officials and senior civil servants.
“When we impose reductions and measures on the Greek people, we must be the first to suffer the main cut, it is a moral responsibility,” said Venizelos, a former foe of Papandreou appointed to the post in a reshuffle last week.
Thousands of Greeks have been gathering outside parliament on a weekly basis to heap abuse on lawmakers for driving the country to the brink of ruin.
EU leaders on Thursday called on “all political parties in Greece to support the program’s main objectives,” saying “national unity is a prerequisite for success.”
However, the country’s No. 2 party, the opposition conservatives, intend to oppose the plan.
“We disagree with the policy mix which has already led to a deep and protracted recession,” party leader Antonis Samaras said after talks with fellow conservative leaders in Brussels.
“Our responsibility lies not in accepting the mistake, but in correcting it,” he said.
“I held my position to the end,” Samaras said, amid reports that he received a dressing-down for his refusal to back a five-year program of spending cuts and tax rises worth more than 28 billion euros by 2015.
In particular, German Chancellor Angela Merkel urged his party “to accept its historic responsibility.”
Greek authorities settled their new budgetary plans during negotiations in Athens with the European Commission, the European Central Bank and the IMF, with Papandreou vowing “radical changes to make our economy viable.”
“This is a fight for the Greek people, this is a fight for Greece, for our country, but it’s also a fight for a common European currency and a common Europe,” Papandreou said.
Finance ministers from the 17-nation eurozone meet again on July 3 — days ahead of a deadline for Greece to repay maturing debt or face default.
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