Greece’s ruling party was in uproar yesterday after lawmakers defected and dissenters doubting the ability of Greek Prime Minister George Papandreou to deal with financial meltdown called a crisis meeting ahead of a reshuffle.
More than a fifth of the PASOK party’s deputies called for an emergency meeting after talks on a coalition collapsed in the wake of mass anti-austerity protests and as Papandreou struggled to form a new government.
Several deputies publicly criticized a policy of cutbacks overseen by the EU and the IMF, which saved Greece from bankruptcy last year, that is deemed to have plunged the economy into an even deeper recession despite huge sacrifices.
Photo: Reuters
“For the past 18 months, efforts to deal with the problem have gone from bad to worse,” Socialist lawmaker Nikos Salagiannis told reporters.
“There is a governance gap,” deputy Dimitris Lintzeris added.
The deputies who quit, former deputy ministers George Floridis and Hector Nassiokas, yielded their seats in protest at the government’s economic policies and the failure of talks with the conservative opposition to form a national unity administration.
Greek lawmakers have been subjected to scathing verbal attacks for weeks by thousands of protesters gathered outside parliament to reject new planned cuts.
Prominent Socialist Vasso -Papandreou demanded an “immediate” meeting of ruling party deputies to discuss the crisis while the IMF voiced concern and French President Nicolas Sarkozy called for a show of unity from Europe.
Papandreou, whose approval ratings are in free-fall as he struggles to enforce an unpopular overhaul of the ailing Greek economy, on Wednesday also announced a confidence vote as fears grew of a disastrous debt default that could rock the eurozone.
The prime minister, who turned 59 yesterday, said he intended later in the day to “form a new government and will immediately ask for a vote of confidence in parliament,” but did not indicate the extent of the reshuffle.
However, Greek Finance Minister George Papaconstantinou is widely rumored to be slated for removal after increasing criticism from Pasok lawmakers on the halting course of Greece’s economic recovery.
The new government was expected to be sworn in today while the confidence vote could be held as early as Sunday, a parliament source said.
Despite a titanic effort to slash the country’s soaring budget deficit, the adjustment ultimately fell short of target as a deeper-than-expected recession exacerbated by the austerity measures neutralized part of the cuts.
Now Papandreou’s government is locked in tough negotiations with its European peers for a new bailout after a previous EU-IMF rescue was deemed insufficient to get the recession-plagued Greek economy back on its feet.
Greece has warned it will be unable to pay next month’s bills without a 12 billion euro (US$16.9 billion) loan installment from the EU and the IMF, part of a broader 110 billion euro bailout package agreed last year.
A critical vote in parliament on a controversial new austerity package worth more than 28 -billion euros, demanded by Greece’s creditors in return for the latest aid infusion, must be held by the end of the month.
A special adviser to the managing director of the IMF, Zhu Min (朱民), said the body was concerned about uncertainty in Greece and ready to provide support.
“The situation changed very dramatically in the last 24 hours,” he said in Paris. “There is a lot of uncertainty ... We are working extremely hard on this issue. We are ready to provide support ... It’s an absolutely important issue today for Greece, for Europe and for the whole global economy.”
Sarkozy urged EU members to “compromise” to protect the euro.
“We need to defend our single currency and our European institutions,” he said, one day before he meets German Chancellor Angela Merkel in Berlin for crisis talks on the eurozone economy.
Many Greeks are angry that after billions of euros in spending cuts and tax hikes last year they are being asked to make more sacrifices.
An estimated 40,000 people protested in Athens on Wednesday as unions staged a crippling general strike, the third this year against the austerity cuts.
The protest was marred by clashes between police and stone-throwing youths that injured dozens and led to 16 arrests.
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