Greek PM warns of chaos if bailout rejected

Greek lawmakers are about to vote on an austerity bill that some Greeks condemn as undemocratic [REUTERS]

Prime Minister Lucas Papademos has told Greeks they face a collapse in living standards and shortages of fuel and medicine if legislators reject a multi-billion euro bailout deal and the country defaults on its debt.

Papademos spoke on Saturday in a televised address to the nation before parliament votes on a deeply unpopular austerity bill to clinch a 130 billion euro bailout from the European Union (EU) and International Monetary Fund (IMF).

“We are fully aware that this economic programme means long term painful sacrifices for the Greek people. Which have already been partially tested. Some say that compared to this painful programme of economic reforms, bankruptcy would be better. They are greatly mistaken,” he said.

“In the case of a disorderly default, the standard of living would collapse. The country would be dragged into a long whirlwind of recession, instability, unemployment and extended poverty. These developments would sooner or later lead to an exit from the euro,” Papademos said.

Some members of parliament said on Saturday they believed the bailout agreement would pass in parliament as it was a matter of national interest, a day ahead of the vote, and despite resignations by some ministers and lawmakers.

Leader of the new Democratic Alliance Party and a former foreign minister in the New Democracy Party, Dora Bakoyannis said it was important for reforms to include measures to stimulate growth and bring the country out of recession.

“Our partners must know that the Greek people are completely exhausted and that we have to bring some measures in which mean more development and measures which will answer the problem of recession today and I don’t think anyone in Europe today will be happy seeing ten million people completely without hope,” Bakoyannis said outside of parliament, as lawmakers from all the parties were discussing the new agreement in a committee.

‘Economic chaos’

Earlier in the day, thousands of protesters massed in Greece under heavy police watch after the government approved unpopular austerity cuts to get vital rescue funds and avoid the “chaos” of a default.

More than 3,500 people streamed to Syntagma Square in Athens on Saturday for the second day of protests and a general strike, with hundreds of riot police standing guard following clashes that erupted during the rallies on Friday.

“We are here to say no to what they want to impose on us,” said Sophia, a 38-year-old researcher, as other protesters held up a banner reading: “They Are Ruining Our Lives”.

The general strike brought public transport to a halt in the Greek capital, with no metro, bus or trolley services.

In the northern city of Thessaloniki, police estimated a crowd of some 4,000 at a similar protest.

Sunday’s vote

Al Jazeera’s John Psaropoulos, reporting from Athens, said the prime minister is urging parliamentarians to do “everything necessary to get this bill passed”.

“The prime minister has said this vote is of crucial importance to the future of Greece, not just for today, but for at least a decade to come,” Psaropoulos said.

Speaking to their respective parliamentary groups, the leaders of PASOK and New Democracy on Saturday urged their MPs to vote in favour of the new debt deal.

Greece was explicitly told by its eurozone partners this week that it must agree to austerity measures in order to secure the release of further loans under the $171bn bailout pending since October.

Greece needs the money to stave off bankruptcy on March 20, when Athens must repay nearly $19.1bn in maturing debt.

Three texts will be put to Sunday’s vote: measures to recapitalise Greek banks, an authorisation for Papademos and the finance minister to sign the eurozone bailout, and a bond swap with private creditors designed to wipe out around $131.9bn from Greece’s $461bn debt, ANA said.

Details of the austerity measures will be included in a follow-up law to be introduced in the next two weeks, the agency said.

The measures, which include slashing minimum wages and facilitating layoffs, have sparked deep anger in a country where more than a million people, or more than 20 per cent of the workforce, are unemployed.

The far-right LAOS party that was part of the coalition said it would not support the further austerity cuts, and its four members in government quit.

They were followed by the assistant foreign minister for European affairs, a socialist who accused the EU of “fixation” on a labour rights overhaul.

Another socialist, a deputy labour minister, resigned Thursday.

At least five socialist and conservative deputies have declared their intention to oppose the cuts on Sunday, and LAOS leader George Karatzaferis said his 16 lawmakers would do likewise.

“We are not going to vote,” Karatzaferis told a news conference, adding: “Humiliation was imposed on us. I do not tolerate this.”

In principle, the two senior coalition partners, socialist Pasok and conservative New Democracy, still have enough support to pass the measures.