Greek Prime Minister Lucas Papademos pledged Friday that his government will spare no efforts to get parliamentary approval for a list of austerity measures demanded by the so-called troika of creditors in exchange for a new EUR130 billion ($170 billion) bailout loan urgently required by Athens to avert defaulting on its debts next month.
Addressing his cabinet on Friday, Papademos said he will do "whatever it takes" to get the bailout deal approved by the country's parliament when put to vote on Sunday. The prime minister told his cabinet members that it was an "hour of historic responsibility" and warned them about the disastrous consequences for Greece if the deal fails to clear the parliament.
"We cannot allow Greece to go bankrupt," Papademos said."A disorderly default would plunge our country in a disastrous adventure. It would create conditions of uncontrolled economic chaos and social explosion."
He went on to say that the misters who disagreed with the bailout deal should quit the parliament, apparently referring to the earlier resignation of five ministers in protest against the largely unpopular austerity measures demanded by creditors, namely the EU, ECB and IMF, in exchange for the new loan.
Later, unconfirmed media reports quoted an unnamed official as saying that the cabinet has pledged its support to the new measures required for availing the bailout. The Greek government is yet to confirm such claims.
Earlier on Friday, four ministers had resigned over the cost cutting measures, including Deputy Foreign Minister Mariliza Xenogiannakopoulou of the majority socialist Pasok party. The remaining three, including transport minister and deputy ministers for merchant marine and agriculture, are from the the right-wing LAOS party. Another minister from the Pasok party had resigned on Thursday.
All the three coalition partners, namely the LAOS, the Pasok and the conservative New Democracy party, had reached a compromise deal on Thursday on the adoption of the austerity measures demanded in return for the new bailout. But LAOS said Friday that all its 16 deputies would vote against the planned spending cuts when it comes for voting in the parliament.
The LAOS party is a junior member in the Papademos government, which is backed by 252 lawmakers. Even without its support, the planned austerity measures would sail though if backed by the two other coalitions partners who account for more than 230 deputies.
The developments come amidst widespread protests as well as a 48-hour strike over the austerity proposals. Workers unions claim that such measures will impoverish the country's population further and drag it deeper into recession. There were several reports of clashes between protesters and riot police in Athens and several other Greek towns and cities on Friday.
A day earlier, eurozone finance ministers had deferred approval of the new bailout package for Greece, saying that the debt-ridden euro member should ratify a new set of austerity measures for receiving the euro 130 billion ($172.52 billion) aid to finance its debts.
Now for Greece to receive the bailout, its parliament should approve the additional measures demanded by its creditors on Sunday. Greece is also expected to and provide "strong political assurances" from leaders of the coalition parties on the implementation of the program ahead of a eurozone finance ministers' meeting scheduled for next Wednesday in Brussels to finalize the bailout deal.
The new bailout package demands a 22% reduction in minimum wages, 15% pension cuts, liberalization of labor laws, convincing private creditors to accept bigger write-downs on their debt holdings and laying-off 15,000 civil servants by end of 2012. The proposed measures are aimed at helping the Greek government save about euro 3.2 billion.
Greece, which has an estimated debt of 350 billion euros, has already availed a joint EU-IMF 110-billion-euro rescue loan in May 2010, of which about euro 73 billion have been handed out to Athens in a series of tranches. Nevertheless, EU leaders agreed at a summit held in October to provide Greece with a new 130-billion-euro rescue package.
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