Originally published Friday, February 10, 2012 at 10:05 PM
Greek PM: 'Catastrophic' if austerity measures don't pass
Greece's future in the eurozone came under renewed threat Friday as protests again turned violent and dissent grew among its lawmakers after European leaders demanded deeper spending cuts.
The New York Times
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ATHENS, Greece — Greece's place in Europe once again hung in the balance Friday, as the fragile interim coalition of Prime Minister Lucas Papademos was plunged into turmoil and European leaders expressed doubts about the country's commitment to remaking its economy and achieving solvency.
After six Cabinet members resigned and as street protests turned violent in Athens amid a general strike, Papademos told lawmakers they must approve the measures — including a 22 percent cut in the benchmark minimum wage and more public-sector layoffs — or the country would suffer a disorderly default with social dislocation and an eventual exit from the euro currency.
In a televised speech, Papademos also threatened to eject from his fragile interim coalition government any Cabinet ministers who objected to the deal. Rejecting the measures "is not an option that we can allow as the country will pay a high price for the consequences," he said. "Any other option would be catastrophic."
In central Athens, clashes erupted outside Parliament between dozens of hooded people and police in riot gear. Police said eight officers and two members of the public were injured, while six suspected rioters were arrested.
The violence erupted as more than 15,000 people took to the streets of the capital after unions launched a two-day general strike that disrupted transport and other public services and left state hospitals running on emergency staff.
Protesters used sledge hammers to smash marble paving stones in Athens' main Syntagma Square before hurling the rubble at riot police.
Papademos' comments kicked off what is expected to be a long and chaotic weekend of brinkmanship, with Greek politicians fighting for their survival in the face of politically unpopular austerity measures and European leaders demanding more concessions in a climate of growing urgency — and mistrust — between Greece and its foreign lenders.
Greece's three foreign lenders — the European Commission, European Central Bank and International Monetary Fund (IMF) — have demanded sweeping austerity measures in exchange for $170 billion in bailout money Greece needs to avert default. The three have also made passage of the measures a condition for sealing a deal in which private creditors will take voluntary losses of up to 70 percent of Greek debt.
But nearly two years after Greece's first bailout, both Greece and its lenders are at a dangerous impasse. Europe has lost confidence that the Greek government has the will or capacity to follow through on its commitments to structural changes. Greeks, whose standard of living is dropping precipitously with no end in sight, have lost confidence that the bailout money will save the country from default.
For now, Europe and Greece appear to lack a viable Plan B. Behind closed doors in Brussels at a meeting of finance ministers Thursday, the lack of trust was evident — and may have put the entire bailout at risk.
The ministers had been expected to bless with little fuss the recently negotiated agreement among Greek politicians on austerity measures. Instead, the European ministers made it plain they did not believe the figures provided by Greece. They jolted Greece by insisting it find an additional $428 million in savings — to fill a budget hole created by political leaders' refusal to slash supplemental pensions — before their next meeting, expected Wednesday.
Adding to the anxiety surrounding the negotiations, on Friday the leader of the smallest of three parties in the governing coalition said he would vote against the austerity package Greek lawmakers agreed to Thursday.
"The creditors are asking for 40 years of submission," said the politician, Georgios Karatzaferis, who heads the right-wing party, Popular Orthodox Rally. "Greece will not give itself up."
The government is still expected to pass the new package. However, several coalition legislators have indicated they object to certain measures — chiefly wage cuts — and may vote against them. The measures were expected to be approved by the Cabinet on Friday as coalition parties convened to discuss the bill ahead of the vote in Parliament, expected Sunday.
On Friday, Papademos told lawmakers that a disorderly default would condemn the country to a "disastrous ordeal."
Material from The Associated Press is included in this report.


