Greek PM rebuffs austerity opponents, vows June vote

By Dina Kyriakidou and Harry Papachristou

ATHENS (Reuters) – The Greek government defended its new austerity package from attacks in parliament on Friday, saying it was the only way to stave off bankruptcy, and made a new call for opposition parties to back the plan.

Prime Minister George Papandreou’s plan almost doubles the belt-tightening measures for 2011 already agreed with the International Monetary Fund and the European Union, after the lenders judged that Athens had missed goals outlined under its bailout.

The ruling Socialist party has 156 deputies in the 300-seat house but growing numbers of its members are expressing unease at proposals including cutting spending and raising taxes to reduce the deficit by 6.5 billion euros more this year than first planned.

Papandreou is anxious to pass the plan for more austerity through 2015 despite strikes, mass street protests and dissident voices within his own ruling Socialist party.

“The medicine is not pleasant and the treatment requires devotion and commitment,” he told parliament.

“No prime minister of any country wants to go out with a beggar’s tray and collect money from other countries … I certainly don’t, but I do it for Greece.”

Papandreou is fighting to get not only opposition parties but also his reluctant PASOK party behind the strategy, a condition for receiving more aid from international lenders who threw Greece a 110 billion euro ($160 billion) emergency funding lifeline last year.


According to a weekly schedule released by parliament, lawmakers will start debating the midterm plan in the chamber’s economic affairs committee on Wednesday.

That will coincide with a nationwide strike by labor unions expected to draw tens of thousands of demonstrators to Syntagma square, parliament’s front stoop and the site of two weeks of nightly grassroots protests.

The square is also the convergence point of daily marches by staff in firms earmarked for privatization who oppose the government’s pledge to raise 50 billion euros in the selloff of state-owned companies by 2015.

In a televised address to the nation, Papandreou invited proposals for the plan from opposition parties and called for cooperation to improve Athens’ position in talks with Brussels ahead of a June 23-24 EU summit.

“I call on the leadership of all parties to cooperate,” he said in a televised announcement. “There are many and important points where we converge. With a national consensus, we can negotiate jointly with our partners.”

In a move aimed at reducing resistance by the main opposition New Democracy party to the measures, Finance Minister George Papaconstantinou said the government was considering submitting a new tax bill in September cutting VAT and corporate taxes and said he hoped parliament would approve the mid-term plan by the end of June.

The IMF and EU have demanded wider political consensus in Greece before they give the debt-ridden euro zone member more cash. But the main opposition groups have vowed to vote against the new measures, saying they are choking economic growth.

“The mid-term plan is unreliable, unjust and ineffective. It is a de facto confession of the failure of the bailout,” New Democracy party spokesman Yannis Michelakis said in a statement.

European officials are still trying to work out a plan which hits private investors for some of the cost of the new funding plan, expected to be worth around an additional 120 billion euros including 30 billion from sales of Greek state assets.

Figures on Thursday showed the economy is in worse shape than initially feared, with gross domestic product tumbling 5.5 percent year-on-year in the first quarter.