Greece heads for stand-still before austerity vote

Greece heads for stand-still before austerity vote

Greece faces a crucial test this week, when much of the country is expected to be shut down by a 48-hour strike on Thursday, as parliament votes on a sweeping package of austerity measures demanded by international lenders.

Greece's two main unions, representing about half the four million-strong workforce, have promised one of the biggest strikes since the crisis began two years ago,

Major sectors expected to be hit by the strike include food and fuel supplies, tax and judicial offices, transportation and healthcare, with hospitals to be run by skeleton staff.

Prime Minister George Papandreou, trailing badly in opinion polls, has defied the protests, pledging to push through a deeply unpopular package that includes tax rises, pay and pension cuts, job layoffs and changes to collective pay deals

His four-seat majority is expected to hold up with the support of smaller opposition parties, but at least two members of the ruling PASOK party may oppose part of the bill when the vote is called, probably in two stages on Wednesday and Thursday.

Bail out

With European Union leaders racing to prepare a comprehensive new bailout deal in time for a summit on October 23, Finance Minister Evangelos Venizelos said that this was the week "during which many things, maybe everything will be decided."

Trapped in deep recession and strangled by a public debt equivalent to some 162 percent of gross domestic product, Greece has been shut out of bond market sand would run out of money within weeks without international support.
Many economists believe Athens can no longer avoid defaulting on its debt, but in a newspaper interview on Sunday, Papandreou said a default would be catastrophic for Greece.

Temporary relief

Inspectors from the EU and the International Monetary Fund were in Athens last week and have recommended releasing a vital 8 billion euro aid tranche to enable the government to keep paying its bills past November.

That will only provide temporary relief and they urged Papandreou's struggling Socialist government to push ahead with further belt-tightening, on top of what are already the deepest cuts in Greece's post-war history.

Violence

Memories are still fresh of the violent clashes between riot police and anti-austerity demonstrators in June, and police will be ready to crack down on signs of trouble during the strikes this week.

The Ministers for health, education and transport, in a joint statement said: “We are fully aware of the huge changes in people's lives and the problems the economic crisis poses to public services; but either we do everything now or we face disaster; obstructing the operations of the state in sensitive sectors is an attempt to worsen conditions and undermine the fight the country and its citizens are engaged in."

Papandreou's ruling PASOK party has seen its ratings drop sharply in recent months as it meets the tough terms imposed in return for EU and IMF aid, while state buildings have been occupied and groups ranging from taxi drivers to lawyers and municipal workers stage daily protests.

REUTERS/Ehimen/Ekata