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Wednesday, January 27, 2021

Greek PM fights to save government amid crisis and anger

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ATHENS, Greece (CNN) — Greek Prime Minister George Papandreou tried to embolden his parliamentary deputies Thursday by telling them to stand fast to the task of rebuilding Greece under a new government, yet to be announced.

“We must not flee the battle, however difficult. I have faith in our MPs, in our movement, in our historical political party. You can rely on me and I will rely on you. We will get Greece out of this crisis,” Papandreou said.

Earlier in the day two members of parliament from Papandreou’s ruling socialists publicly resigned, shaking confidence in his efforts to reconstitute his cabinet. One of the two, former government minister George Floridis, said both Papandreou and the leader of the main, conservative opposition had displayed unforgivable lack of leadership in failing to form a national coalition. “One-party governments, even if they include broadly popular figures, cannot bring about today’s difficult mission,” Floridis said in an open letter. Political stability could have been provided “only by a transitional government of national salvation” he said.

“This is not the time for bemoaning our fate and complaining,” Papandreou responded in his speech. “The next government will be more effective and proceed to make the great changes that the people want and demand.”

Papandreou spoke with conservative leader Antonis Samaras by phone on Wednesday afternoon after street riots marked the introduction of a new, 28 billion euro ($39 billion) austerity bill in Parliament. But by evening their talks broke down into mutual recriminations.

“New Democracy did not face the problem under conditions of responsibility,” Papandreou said. “Even before the substance was discussed they put conditions on the table that were unacceptable.”

Many political observers were skeptical about whether Papandreou had the political authority left to form a new government.

The political crisis in Greece has helped send the euro down two points against the dollar over two days, while the credit default market now puts a 78 percent chance on Greece failing to pay its debts.

Papandreou plans to unveil a government reshuffle Thursday, he said, even as lawmakers from his own party try to force a closed-door meeting that could see him pushed out.

Vasso Papandreou, a founding member of the governing PASOK party, said it was “a critical time for the country” as she circulated a petition among party members calling for “an immediate meeting of PASOK’s parliamentary group.”

When asked what would be discussed at the meeting, she replied: “Everything.”

The lawmaker calling for the meeting is not related to the prime minister.

George Papandreou is trying to bring the government deficit down in order to secure a second enormous bailout package from international institutions including the International Monetary Fund and the European Union.

There are fears that efforts to restructure Greece’s debt could wreak havoc with Europe’s banking sector, sparking a re-run of investor panic like that caused by the 2008 collapse of the Lehman Brothers investment bank.

The crisis also raises concerns for Europe’s currency, the euro. If struggling nations such as Greece, Portugal or Ireland default on debts, it could knock the bloc into the red, affecting the entire world economy.

The planned Cabinet reshuffle represents an attempt to win support for additional austerity measures intended to help the economy weather the current crisis.

Papandreou faces strong opposition from his own party over the measures.

After Papandreou’s announcement of the reshuffle in a brief televised statement Wednesday, the main opposition called for an early election.

The party, New Democracy, has repeatedly demanded that Papandreou quit and that a cross-party coalition renegotiate the terms of the bailout package.

Papandreou said Wednesday he was willing to resign if he was the only thing standing in the way of a national unity government.

The government’s popularity has plunged recently, and anti-government protests turned violent Wednesday, as demonstrators threw gasoline bombs at the Ministry of Finance and police fired tear gas at protesters, police said.

Tens of thousands of protesters had vowed to form a human shield around the parliament to prevent lawmakers from debating the new austerity measures Wednesday afternoon.

“This is a joke. It is all a joke,” protester Christos Miliadakis, 35, said of the government plans.

“When will we be able to get out of this vicious circle? My wife lost her job. I had a 12% pay cut as a result of the first bailout. The new measures want to cut another 20% of jobs in the public sector,” he said. “So if no one has money and we are just more in debt, who is going to drive the economy? We will live like slaves paying all our lives.”

Architecture student Maria Iliadi, 23, said that, for people like her, “the future in this country has been erased. There will be no big public projects, and no one will be building for a long time. Sometimes, finishing my degree seems totally pointless.”

About 25,000 demonstrators were on the streets of the capital by the middle of the day Wednesday, police said. Two police officers and four civilians were slightly injured, and 12 people were arrested, they said.

On June 9, the Cabinet approved a tough five-year plan for 2011-15 and introduced a bill in Parliament to put the measures into effect.

The government has said that the passage of these additional measures is essential to Greece’s securing the fifth portion of a 110 billion euro ($158 billion) bailout package that Greece signed with the European Union and the International Monetary Fund to prevent the country from defaulting on its debts.

Finance Minister George Papaconstantinou has said the country hopes to secure a second bailout deal this month.

The search for a second bailout comes after it became evident that Greece is extremely unlikely to raise capital from private markets in 2012 due to the prohibitively high interest rates it would face.

Papaconstantinou has also indicated that European Union members may support calls to get the private sector involved.

Despite the harsh austerity measures that the Greek government has imposed, it is failing to close its budget deficit as quickly as many had hoped. The country is in recession amid its fiscal restructuring program.

The finance minister has defended the five-year austerity plan, saying it is needed to keep Greece solvent. The new measures will include a number of additional taxes and an additional 20% cut in public-sector jobs.

Protesters have been gathering outside Parliament for more than three weeks as part of an ongoing peaceful demonstration against austerity measures, with some camping in the square facing Parliament.

The credit rating agency Standard & Poor’s on Monday cut Greece’s rating to just two notches above default, among the lowest in the world. The agency has said a default on some debt appears “increasingly likely.”

Unemployment in Greece skyrocketed to more than 16% in May, a 40% rise since last year.

The European Commission has said Greece’s economy was expected to shrink by 3.5% this year.

Journalists John Psaropoulos and Elinda Labropoulou contributed to this report

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