Tags: EU | Greece | Financial | Crisis

Greece: Bailout Is Only Hope, Austerity Measures Must Be Taken

Thursday, 06 May 2010 07:17 AM

Greece's only hope of avoiding bankruptcy is to take money from a joint EU and International Monetary Fund rescue package, the finance minister said Thursday during a heated Parliamentary debate overshadowed by the deaths of three people during protests against spending cuts.

Greece has to impose harsh austerity measures, including slashing salaries and pensions and increasing taxes, in order to get money from the 110 billion euro ($141 billion) three-year package, which will provide the country with loans from other euro zone countries and the IMF.

The loans are aimed at containing the debt crisis and keeping Greece's troubles from spreading to other countries with vulnerable state finances such as Portugal and Spain. The euro has sagged as those countries have seen debt downgrades, falling below $1.28 Thursday; late last year it was as high as $1.51.

The cuts have sparked outrage in Greece, with an estimated 100,000 people spilling onto the streets of Athens during a nationwide general strike Wednesday to protest the measures.

Demonstrations quickly turned violent, with protesters trying to storm parliament and clashing with police in extensive riots that saw banks, stores and hotel windows smashed and two buildings burned. A man and two women — one of whom was pregnant — died when they became trapped in a burning bank torched by protesters. Firefighters used a crane to rescue another four people from the building's balconies.

Finance Minister George Papaconstantinou said the government had no choice but to impose the austerity measures, which were being rushed through Parliament to a vote later Thursday.

Papaconstantinou said the draft bill was introduced as urgent legislation because the country was two weeks away from default, with 8.5 billion euros worth of bonds maturing on May 19.

"The state's coffers don't have that money," Papaconstantinou said. "Because today ... the country can't borrow it from the international market. And because the only way for the country to avoid bankruptcy and suspension of payments is to take the money from our European partners and the International Monetary Fund."

But in order to receive the money, Greece must agree to a three-year austerity program, he added.

"The government has the responsibility of implementing the most difficult financial measures ever taken in this country. It is a program which requires effort and sacrifice, and obliges us morally and politically to succeed," Papaconstantinou said, describing the rescue package as "our country's last hand."

"We are asking for loans from countries that also have deficits and from countries that are also the subject of speculative attacks. And for those to be granted, we must persuade them that we are putting our house in order," he minister said.

Wednesday's deaths — the first such fatalities in protests in nearly 20 years in Greece — have shocked the public in a country where violence during demonstrations is frequent but rarely results in casualties.

An impromptu shrine with flowers and candles was set up in the burned-out windows of Marfin Bank where the three bank workers lost their lives.

"I have difficulty in finding the words to express my distress and outrage," President Karolos Papoulias said late Wednesday. "Our country came to the brink of the abyss. It is our collective responsibility to ensure that we don't step over the edge."

Still, unions and far-left groups planned more protests against the measures for Thursday during the parliamentary vote.

Newspapers were rushed to press late Wednesday after the journalists' union called off their participation in the strike to report on the riots.

"Now everyone is judged. Greece frozen by the triple tragedy," headlined the daily To Vima above a front-page photo of two soot-blackened women calling from help from the balcony of the burning bank. "The abyss and the responsibility," headlined Ta Nea.

More than 40 policemen and 15 civilians were injured in the riots, while 25 people were arrested, police said.

The bank workers' union, OTOE, called a strike for Thursday to protest the loss of life, condemning the violence but saying the deaths were the result of the government's austerity measures.

Many banks in central Athens remained open despite the call for a strike, however.

The union blamed politicians, the police and bank management for being "morally responsible" for the deaths.

"But serious political responsibility also lies with the government, which appears not to have calculated the size and the extent of the consequences" of the joint IMF and EU rescue package, it said.

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Greece's only hope of avoiding bankruptcy is to take money from a joint EU and International Monetary Fund rescue package, the finance minister said Thursday during a heated Parliamentary debate overshadowed by the deaths of three people during protests against spending...
Thursday, 06 May 2010 07:17 AM
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