Greek President Carolos Papoulias called crisis talks with political leaders yesterday in a bid to rein in social tensions as the EU moved to limit the fallout from Greece’s debt crunch on world markets.
The talks are being boycotted by representatives of the Communist and left-wing Syriza parties, who have helped mount protests in recent weeks against drastic austerity measures aimed at slashing Greece’s budget deficit.
More rallies are expected as the government prepared to unveil an overhaul of the pensions system later yesterday that could see retiree payments in Greece cut by around a quarter, Greek newspapers reported.
PHOTO: AFP
“Smaller pensions — more work,” read a headline in the Ta Nea daily.
Eleftheros Typos said the draft pensions law due to be approved “will include at least 15 painful changes” from the previous legislation.
The reform would raise the retirement age for women to 65 and increase the number of years that workers have to pay retirement contributions.
Papoulias last week warned that Greece stood on the “edge of the abyss” after violent clashes broke out during a general strike against the government’s plans, killing three people in a bank that was firebombed.
EU finance chiefs yesterday agreed an unprecedented 750 billion euro (US$972 billion) rescue package with IMF help for crisis-hit eurozone countries. The overall package was described as a “big step forward” by IMF managing director Dominique Strauss-Kahn.
The plan “proves that we shall defend the euro whatever it takes,” EU Commissioner for Economic and Monetary Affairs Olli Rehn said.
The battered euro surged in reaction to the deal and European stock markets soared by between 1.5 percent and 3 percent at the start of trading, but in Greece there is widespread anger despite approval of a 110 billion euro bailout from the EU and the IMF to help the country stay solvent, with many concerned at the cuts demanded by the international lenders.
Greece’s borrowing costs fell sharply yesterday after the EU unveiled its plan.
The difference between yields on Greek 10-year bonds and their benchmark German equivalents was at 4.72 percentage points, down massively from a record 10.25 points on Friday.
The general share index on the Athens stock exchange gained 9.59 percent in morning trading, reaching 1,786.84 points.
Greek Finance Minister George Papaconstantinou said the agreements meant his country would have no trouble paying off creditors.
“Over the next few days, payment will start of the first section of the loans from the European Union and the International Monetary Fund, so that the country has no problems whatsoever with its borrowing needs and servicing its debt this month, and for months to come,” Papaconstantinou said.
The pension reform scheduled to be announced yesterday comes on top of measures agreed earlier that eliminate 13th and 14th month pension and public sector wage bonuses, as well as an increase in the sales tax.
The country’s main union, which represents around a million private employees, has pledged to mobilize to prevent the pension reform from passing
A poll on Sunday, however, showed Greeks grudgingly accepting the need for cuts.
The survey in To Vima showed that 55.2 percent of respondents would accept austerity measures, while 56.3 percent preferred wage cuts to national bankruptcy and 71.3 wanted squabbling political parties to cooperate.
The poll surveyed 1,030 people last Thursday. The poll had a margin of error of plus or minus 3.1 percentage points.
Another survey in Kathimerini newspaper shows 77 percent of respondents saying the measures are unfair, but 79 percent saying the government would carry them through. For the poll 527 people were surveyed last Tuesday, with an error margin of plus or minus 4.5 percentage points.
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