GREEK BAILOUT:GREEK PRIME minister George Papandreou faces a crucial test today as he presents swingeing new austerity and privatisation measures to parliament, an initiative which has prompted a storm of conflict within his own party.
With MPs and ministers in his own Pasok socialist party up in arms over the measures required for a €12 billion rescue loan next month and a second international bailout next year, Mr Papandreou has been battling for days to ensure his own government backs the initiative.
Amid ongoing street protests in Athens, the pressure on the prime minister intensified yesterday when new official figures showed the Greek unemployment rate had climbed to 16.2 per cent.
This suggests as many as 811,000 people are out of work in a country of 10 million, although the real unemployment level is assumed to be higher.
While finance minister George Papaconstantinou faced heavy criticism from his own party colleagues at an eight-hour meeting of a key parliamentary committee on Tuesday, government sources in Athens have been stressing that none of the dissenters has yet threatened to vote down the package.
Still, close observers say Mr Papandreou appears increasingly vulnerable as he tries to face down dissenters within his cabinet and the wider Pasok parliamentary party.
Even before Mr Papandreou agreed the new austerity package last Friday with the EU/International Monetary Fund/European Central Bank “troika”, about half his cabinet were said not to be supporting the reform initiative.
“There is a sense of internal crisis in the governing party. There is a sense of revitalisation in terms of the opposition to Papandreou within the party,” said Vassilis Nedos, political correspondent with the Greek daily Kathimerini.
“He seems a little bit cornered, in a way that is very much different than in the past.”
Mr Papandreou was briefing the Pasok party’s decision-making executive last night, ahead of a cabinet meeting today and the presentation of the latest reform plan to parliament.
In advance of that meeting, his Labour minister, Louka Katseli, said Pasok MPs wanted to know whether the sacrifices made by Greeks for the existing bailout were working. “The deputies are demanding that the burden should be shifted to those who can withstand it better,” she said on local television.
A formal vote on the package is not scheduled until June 28th, three days after an EU summit in Brussels at which European leaders are to take stock of the increasingly volatile situation in Greece.
The political turmoil is causing anxiety in European circles, where euro zone leaders are reluctantly coming around to the notion that Greece could need as much as €60 billion in a second bailout package.
After meeting in Brussels yesterday with Greek opposition leader Antonis Samaras, European Council president Herman van Rompuy said “major efforts” were required to put the country’s public finances on a steady footing.
Although the European authorities have urged Greek leaders to forge a national consensus in the recovery effort, Mr Samaras’s New Democracy party has declared it will not be supporting the latest initiative.
Mr van Rompuy pressed him to reconsider.
“Efforts to put Greece back on track to a sustainable and credible fiscal path and to economic recovery require all parties to provide broad and constructive political support. I have urged Mr Samaras to be co-operative in this respect,” he said.
