Greek PM hints at referendum over austerity plans

                                                                                      Dimitri Messinis  /  AP
Demonstrators gather during a peaceful rally outside the Greek Parliament in Athens, on Sunday, June 5, 2011. Thousands of protesters have gathered for a 12th consecutive day to protest at fiscal austerity measures and demand that Greece stop paying its debtors. They have also denounced politicians of all stripes as incompetent and corrupt.
(AP Photo/Dimitri Messinis)

ATHENS, Greece — Greece’s prime minister said Monday he will consider holding a referendum on further cutbacks essential for the loan-dependent country to continue drawing on funds from an international bailout, amid persistent anti-austerity protests.

“I am prepared, for the great changes that we are putting forward, to use even the institution of a referendum, for the broadest possible consent or opinion,” George Papandreou told his ministers during a marathon informal Cabinet meeting that ran for more than seven hours.

Papandreou has been trying to quell dissent within his own governing Socialists as well as widespread anger among Greeks furious that a year’s worth of painful cutbacks have failed to produce the expected results.

Thousands of people have been holding peaceful protests outside Parliament in Athens every night for nearly two weeks, and frustration increased as it became apparent that the government has to impose yet more spending cuts and tax hikes.

In statements delivered during the meeting and released by his office, Papandreou said he had called on the Interior Minister to set up the necessary legislative conditions that would allow such a move “when it is needed.” He gave no further details.

The new plans — euro6.4 billion ($9.34 billion) worth of remedial measures this year and a euro22 billion ($32.11 billion) package through 2015 — are required if Greece is to continue receiving money from last year’s euro110 billion ($160.56 billion) program of rescue loans from the International Monetary Fund and other countries that use the euro. The government is also pushing through an ambitious euro50 billion ($72.98 billion) privatization drive.

Greece looks like it will also need more money to cover a funding gap next year and prevent the country from defaulting on its debts.

Last week, debt monitors from the EU and IMF said Greece should receive the next euro12 billion ($17.52 billion) installment of the bailout in early July — as long as additional austerity and privatization measures are deemed sufficient. A final decision is to be taken by the IMF board and the eurogroup in meetings later this month.

But Papandreou, whose PASOK party has a majority of six seats in the 300-member Parliament, faced a potential rebellion from within the Socialists.

Last week, 16 PASOK deputies signed a letter demanding an extensive debate on the measures before they are ratified, with one of the signatories threatening during an interview on state television not to vote for the reforms otherwise.

A formal cabinet meeting is expected to decide on the new measures on Wednesday, and the package will then be tabled in Parliament for ratification later this month.

A government official with knowledge of the discussions during Monday’s meeting said the government would have to listen to the dissenting views. However, he said Greece’s European partners want to see “steady action at a fast pace.”

He spoke on condition of anonymity to reveal details of Monday’s discussions.

Papandreou insisted Monday that he would renew efforts to secure consensus for the new austerity package from other political parties — despite repeated refusals from the main opposition Conservatives.

He said, however, that he would not take the highly risky step of seeking a broader majority in Parliament, beyond the minimum 151 votes needed to ratify the reforms.

“This is not an issue of arithmetic, but of politics,” Papandreou said.

The new measures will include further across the board tax increases, more spending cuts and trimming the size of the public sector. The government is also pushing through an ambitious euro50 billion ($72.98 billion) privatization program.

As part of the privatization drive, Deutsche Telekom said Monday it was buying 10 percent of Greece’s dominant OTE telecoms, raising its stake to 40 percent. The government had sold an initial stake in the former state monopoly to the German enterprise in 2008, and is now exercising an option to sell 10 percent more.

Deutsche Telekom says the deal would be worth around euro400 million ($584 million) at today’s stock price although the final price will be fixed later. It leaves the Greek government controlling a 10 percent stake in OTE.

OTE workers’ unions have already voiced their objections, and are to join a public utilities strike on Thursday.

The ever increasing cutbacks have led to an unprecedented public backlash, with tens of thousands of Greeks flooding into the main squares of cities across the country in a peaceful protest fueled by appeals on social media now in its second week.

Sunday — the 12th straight day of protests modeled on similar demonstrations held in Spain last month — saw the largest gatherings so far. More than 60,000 people jammed the capital’s main Syntagma Square, according to police estimates, although participants said the numbers were much higher.

With no particular political affiliation, the peaceful rallies have been a break from the traditional form of demonstrations in Greece, which are usually organized by trade unions or political parties and often turn violent.

Protesters gathered again in Syntagma Square again Monday evening, but in far fewer numbers. Under a thousand people rallied outside Parliament, chanting anti-austerity slogans.


Derek Gatopoulos and Nicholas Paphitis contributed

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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