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Europe
Greek cabinet approves bailout deal
Draft bill commits Athens to austerity reforms, amid warnings of "economic chaos" if parliament fails to ratify it.
Last Modified: 10 Feb 2012 11:14

The Greek cabinet has approved a draft bill committing the country to reforms required by the European Union and the International Monetary Fund in return for a new $173 billion (130 billion euro) bailout Athens needs to avoid a messy bankruptcy, government officials said.

“It was approved,” a minister who took part in the cabinet meeting said on Friday.

The bill is scheduled to be voted in parliament on Sunday, which would take Greece one step closer to getting the loan.

'Economic chaos'

Earlier on Friday, Greece's prime minister told his coalition government to accept the international bailout deal or condemn the nation to catastrophe.

He warned that the country faces "economic chaos and a social explosion" unless it accepts new austerity measures, as his government faced a national strike, street protests and ministerial resignations.

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Lucas Papademos, the unelected leader who was appointed in November to steer Greece through its financial crisis, told his cabinet that it could not allow Greece to go bankrupt, even as several members of the coalition government quit their posts or said they could not support the reforms.

"Our priority is to do whatever it takes to approve the new economic programme and proceed with the new loan agreement," Papademos said.

"It goes without saying that whoever disagrees and does not vote for the new programme cannot remain in the government."

European finance ministers have called on Greece to make further cuts in return for payment of a bailout loan which Athens needs to avoid defaulting on bonds repayments next month.

At least three cabinet members from the right-wing LAOS party resigned, after their party leader had earlier announced that his bloc would not be voting for the proposed budget cuts.

Marilisa Xenogiannakolpoulou, the country's deputy foreign minister and a member of the Socialist PASOK party, also resigned in protest, state television reported.

But Xenogiannakolopoulou's party said it would stand by the government in a parliamentary vote.

"In the crucial parliamentary votes ahead, the national interest requires a responsible stance and positive vote by all
lawmakers so that the country can safely get out of the crisis," PASOK party spokesperson Panos Beglitis said in a statement.

Eurozone's demands mounting

The Greek coalition government had hoped the country's crisis would ease after leaders agreed to austerity measures they hoped would pave the way for the bailout package.

"I am confident that a solution will be reached next week as this is critically important for Greece and the Greek citizens first and foremost but also for the whole euro area"

- Jose Manuel Barroso,
EU Commission President 

However, finance ministers from the other 16 eurozone states insisted that Greece save an extra $430 million (325 million euros), pass the cuts through parliament and guarantee in writing that they would be implemented even after planned elections in April.

Many Greeks, already suffering from five consecutive years of recession, are increasingly angry about the measures, which are unlikely to quickly help an economy where one in five is unemployed, businesses are failing and household incomes are falling.

Papademos and the heads of the three parties backing his government have already agreed to deep private sector wage cuts, civil service layoffs, and significant reductions in health, social security and military spending.

But Al Jazeera's John Psaropoulous reported from Athens that several members of the ruling coalition seemed to have signed off on the deal, only to renege on their commitment before an actual vote.

"The country seems to be descending into some form of political schizophrenia," he said.

Clashes in Athens

Greek unions began a two-day national strike on Friday, with transport networks halted and ships docked in the country's main ports, not long after another nationwide action on Tuesday.

Doctors, bank employees and teachers also walked off the job, although flights were not affected by the strike, an airport official said.

"The measures included in the new memorandum ... are the 'tombstone' of the Greek society," the civil servants' union ADEDY said in statement. "It's time for the people to speak up." 

Clashes erupted outside parliament in Athens, as dozens of hooded youths threw fire bombs and stones at police, who responded with tear gas, but the violence was not prolonged, our correspondent said.

Follow our comprehensive Euro Crisis spotlight coverage

Police said about 7,000 people took part in the demonstration, while another 10,000 supporters of the country's Communist party held a separate, peaceful march.

The square earlier echoed with loudspeaker calls to rally against the measures: "No to layoffs! No to salary cuts! No to pension cuts! Do not bow your heads! Resist!"

Still, the EU Commission's president said he expected a deal to go through.

"I am confident that a solution will be reached next week as this is critically important for Greece and the Greek citizens first and foremost but also for the whole euro area,'' Jose Manuel Barroso said on Friday during a visit to India.

"I therefore call on the responsibility and the leadership of the Greek leaders and all members of the eurozone so that we can obtain this goal that is important for the euro area and indeed for the global economy.''

Some Greek newspapers seemed to support the demands.

"Greece's credibility is zero. That is why the troika [of officials from the EU, IMF and European Central Bank] is asking for written assurances and the voting of the implementation laws," financial daily Imerisia wrote in an editorial.

"Let us decide ... if we want to continue being part of the eurozone or if we wish to walk down a dark path."

Source:
Al Jazeera and agencies
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