Greeks riot as PM fights for savings plan

GREEK Prime Minister George Papandreou has offered to step down to make way for a national unity government, provided it supports European Union/International Monetary Fund bailout plans, Greek state sources said yesterday.

But a source in the conservative New Democracy party said they would only take part in a new unity government if it renegotiated the bailout and Papandreou resigned.

“We told the prime minister... we would accept a government of wider co-operation on two conditions: that Papandreou is not the prime minister, and that its target will be the renegotiation of the terms of the [EU/IMF] memorandum and the midterm fiscal plan,” the source said.

Earlier yesterday, angry youths hurled petrol bombs at the finance ministry and tens of thousands of protesters marched on parliament to oppose efforts to pass new austerity laws for the debt-choked state.

Unions representing half the five million-strong workforce also launched a nationwide strike, shutting government offices, port and schools, and reducing hospitals to skeleton staffs.

Papandreou must push through a five-year campaign of tax rises, spending cuts and sell-offs of state property to continue receiving aid from the EU/IMF and avoid default.

He not only faces public protests and resistance from a conservative opposition that has surpassed his Socialist party in opinion polls, but also from backbenchers in his own parliamentary grouping who are threatening to reject the plan.

One PASOK deputy defected on Tuesday, reducing the party’s majority to 155 seats out of 300. Another said he would oppose the bill. Most analysts still expect the bill to pass.

Thousands of activists and unionists converged on the central Syntagma square on the parliament’s front steps to try to stop lawmakers from entering to debate the bill.

Stun grenades boomed round the square and smoke rose from burning garbage bins as police fired tear gas and fought with scores of youths who fought back with rocks and long clubs.

“We want them out,” said Antony Vatselas, 28, an engineer. “Obviously these measures are not going to get us out of the crisis. They want only us to pay for it. And they are doing nothing. I want the debt to be erased. If this doesn’t happen, there is no exit for Greece.”

One group hurled petrol bombs and clashed with police at buildings housing the finance ministry, also on Syntagma square.

However, the vast majority of the diverse crowd — which included union workers, political party members and pensioners — only shouted at the parliament building and remained peaceful.

“Thieves, traitors!” many chanted. “Where did the money go?”

Police said seven protesters and two officers were slightly injured, and that they had detained 40 people. They said the crowd numbered around 30,000.

The new austerity package foresees €6.5 billion in tax rises and spending cuts this year, doubling measures agreed with bailout lenders that have pushed unemployment to a record 16.2 percent and extended a deep recession into its third year.

The plan includes new luxury taxes, a crackdown on tax evasion and tax rises on soft drinks, swimming pools, restaurant bills and real estate. Greece’s 750,000-strong public work force would be cut by 20%.

With those and other measures worth total savings of €28bn through 2015, Greece also aims to raise €50bn by selling off state-owned firms.

Political analysts said the strong public outcry had raised pressure on ruling party deputies. Failure to push through the measures would put Greece in default and had the potential to shock global markets.

“The government’s medium-term fiscal plan will pass,” said economist Gikas Hardouvelis at EFG Eurobank. “If it doesn’t, the impact on global markets will be significant.”