Greek cabinet approves harsh terms for bailout
EU and IMF have demanded deep cuts before providing assistance
ATHENS — The Greek cabinet approved a draft bill spelling out reforms required by the EU and the IMF late Friday, taking Athens closer to getting a new $ 170- billion bailout after the prime minister warned the alternative was “catastrophe.”
All eyes will now be on parliament, which is scheduled to vote on the bill on Sunday. Analysts expect the deeply unpopular package to be adopted but Greek politics remain highly unstable.
Even after this is done, the EU also wants a further $ 430 billion of spending cuts and clear commitments by main party leaders that the reforms will be implemented before it agrees to release the aid.
Technocrat Prime Minister Lucas Papademos told his turbulent coalition government earlier on Friday to accept the harsh international bailout deal or condemn the nation to disaster.
“We cannot allow Greece to go bankrupt,” he told a cabinet meeting. “Our priority is to do whatever it takes to approve the new economic program and proceed with the new loan agreement.”
Papademos, the sole technocrat in a coalition of feuding politicians, tried to assert his authority after six cabinet members resigned over EU and IMF demands for yet more pay, pension and job cuts in return for the financial rescue.
The austerity plan includes lowering the minimum wage by 22 per cent, axing 150,000 public sector jobs and cutting pensions.
“It goes without saying that whoever disagrees and does not vote for the new program cannot remain in the government,” he said in televised remarks.
Greece faces bankruptcy unless it gets the funds from the IMF and European Union by March 20 when it has to repay $ 19 billion in maturing bonds.
“It was approved,” a minister who took part in the cabinet meeting said about the draft bill.
A former central banker, Papademos tried to raise Greeks’ spirits as the nation enters its fifth year of recession, saying economic growth would return in 2013 despite accusations that the austerity is merely driving Greece into a downward spiral.
Any alternative to the rescue would be much worse, he said in opening remarks using the word “catastrophe” four times.
Earlier, far- right leader George Karatzaferis said he could not back the tough terms attached to the bailout and all four cabinet members of his LAOS party submitted their resignations, along with two from the socialist PASOK party.
Outside parliament, police fired tear gas at black- masked protesters who threw petrol bombs, stones and bottles at the start of a 48- hour general strike against the cuts ordered by the “troika” of international lenders. But the street protests were relatively small compared to last year’s mass rallies.
A group of 35 lawmakers from PASOK, whose public support has collapsed, protested against pressure from eurozone ministers.
“Our lenders are once again presenting the dilemma: either you take the measures or you lead the country to a default,” they said in a protest letter.
The biggest police trade union said it would issue arrest warrants for Greece’s international lenders for subverting democracy, and refused to “fight against our brothers.” A daily newspaper depicted German Chancellor Angela Merkel in a Nazi uniform with a swastika armband.