Unrest Flares Ahead of Greek Vote
ATHENS—Simmering discontent among Greek politicians on Friday tested a deal reached just a day earlier to support austerity policies demanded by the government’s international creditors, unnerving investors seeking assurance that Greece will get a fresh bailout and escape a catastrophic debt default.
A wholesale revolt against the deal, announced Thursday morning after all-night talks, still appeared unlikely: The main parties in the Greek coalition government—the socialist Pasok party and conservative New Democracy—are still behind the accord, which was approved by the cabinet Friday, and together they hold a large majority in the Parliament.
But the nationalist Laos party, the junior member of the coalition, withdrew its support Friday, saying it won’t vote for the reforms, a sign of the intense pressure facing politicians as they prepare for a parliamentary vote on the deeply unpopular austerity program as early as Sunday.
Clashes broke out in central Athens on Friday after Greece’s major unions launched a 48-hour nationwide strike to protest new austerity measures. Alkman Granitsas has details on The News Hub.
Protesters clash with riot police during a general strike in Athens on Friday.
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The Laos party said four of its officials who hold posts in the cabinet of Prime Minister Lucas Papademos have offered to resign from the government.
The resignation offers came just hours after Laos party leader Giorgios Karatzaferis told a news conference: “There is no way we will vote for [the austerity measures],” and sharply criticized German leaders and Europe’s policy toward Greece saying he wouldn’t accept the further “humiliation” of the country.
Mr. Papademos has received the resignations and is considering them, officials in the prime minister’s office said. Speaking ahead of the cabinet meeting, Mr. Papademos said that those who don’t agree with the new program can’t stay in government.
“The bankruptcy of Greece is not an option we can permit,” he said.
Ahead of the cabinet meeting, clashes broke out in central Athens as Greece’s major unions launched a 48-hour nationwide strike to protest the measures demanded by the country’s creditors, adding to social tension in a country now in its fifth year of economic recession.
Hundreds of hooded youths in the main Syntagma Square in Athens attacked riot police with gasoline bombs, rocks and other projectiles, smashing objects in and around the square.
Police fired tear gas and staged running charges to scatter the youths. According to police estimates, some 18,000 demonstrators took part in the protest and there were 11 detentions, six arrests and a total of 10 injuries reported.
Euro-zone finance ministers refused to sign off on a second bailout program for Greece at their meeting Thursday night without the Greek Parliament voting to enshrine the new round of austerity into law. The ministers, deeply mistrustful of Greek political leaders after nearly two years of missed milestones, also asked for a written commitment from the main Greek political parties to support the program.
Uncertainty about the fate of the second bailout drove up government bond yields in the euro zone’s weaker economies. The euro fell almost a cent against the dollar to $1.319. With a €14.5 billion ($19.1 billion) bond repayment due March 20, time is running short for Europe and the International Monetary Fund to put together a complicated bond swap operation that is supposed to cut around €100 billion off what Greece owes its private-sector creditors.
The political parties supporting Mr. Papademos’s government backed the draft bailout program Thursday morning after all-night talks. The draft plan calls for more than €3 billion in additional cuts to the 2012 budget, as well as a deeply controversial plan to cut private-sector wages. It will slash the minimum wage in the private sector by 22%, abolish permanent jobs in state enterprises, and cut 150,000 jobs in the public sector by 2015, among other measures.
The package of cuts approved by the government cabinet Friday is scheduled to go before Parliament for a crucial vote Sunday. Finance ministers are set to meet again in Brussels on Wednesday to approve the deal, which would hand Greece an additional €130 billion in bailout loans.
The Laos party controls just 16 seats in Greece’s 300-member Parliament. Even without its support, the two main coalition partners—the Socialists and the conservative New Democracy party—have a combined 236-seat majority.
But the two main parties are facing dissent in their ranks, with several lawmakers from both parties voicing their objections to the package in the past few days.
The announcement by Mr. Karatzaferis may embolden other lawmakers to also break with party lines and comes amid rising popular opposition to the new austerity measures.
Mr. Karatzaferis has been the shakiest supporter of Mr. Papademos’s government. Since joining the coalition in November last year, Laos has seen its popularity slip in recent public opinion polls, while Greece’s left wing parties—who oppose the measures as well as the coalition—have seen their support grow. Despite saying he would vote down the measuresHe had said he would continue to support Mr. Papademos and renewed his call for a cabinet reshuffle that would replace existing Socialist ministers with technocrats.
—Andrea Thomas in Berlin contributed to this article.