Greece: stocks up but opposition blasts debt deal

AP News
Posted: Oct 27, 2011 11:42 AM
Greece: stocks up but opposition blasts debt deal

Shares on Greece's stock market closed sharply up Thursday following a debt deal reached by European leaders that the country's finance minister described as a new starting point for the country.

But opposition parties blasted the landmark agreement, with conservatives warning it condemned the country to "nine more years of collapse and poverty."

Shares on the Athens Stock Exchange joined a surge in world markets, closing up 4.82 percent at 811.11, with banking stocks up nearly 12 percent during the day after suffering heavy losses earlier this week.

Greece's sky-high rates for long-term borrowing and default insurance also eased slightly.

The deal requires banks to take on 50 percent losses on Greeks bonds. Eurozone countries and the International Monetary Fund will also provide an additional euro100 billion ($140 billion) in rescue loans as a second bailout package for Greece.

"We have avoided a mortal national danger," Socialist Prime Minister George Papandreou told a news conference in Brussels after the night-long negotiations.

"Today we have the ability to close our accounts with the past," he said. "A burden from the past has gone, so that we can start a new era of development, on our own steam."

Greece's troubled euro230 billion ($320 billion) economy is heading into a fourth year of recession, with unemployment at 16.5 percent and taxpayers struggling to cope with a barrage of new taxes on property, purchases and their shrinking incomes.

Finance Minister Evangelos Venizelos said Greeks would not face any new cutbacks affecting their salaries and pensions this year or next _ provided the austerity measures voted on so far are fully implemented.

"I want to say in an absolutely categorical way, that Greece has taken and approved the measures it had to for 2011 and 2012," he said in a news conference after returning from Brussels.

Venizelos said the new deal was more favorable for Greece and harsher on banks than a previous deal reached in July under which banks would have taken a 21 percent loss on their bonds.

But the minister said the new private sector participation, which is voluntary, would still be attractive.

"I believe that everyone in the private sector understands ... that the formula is in the interests of all and is attractive to all," he said.

The Socialists have 153 seats in the 300-seat parliament, its majority whittled down from 10 seats over two years by opposition to the harsh austerity measures that have triggered frequent strikes, mass protests and violent demonstrations.

Conservative opposition leader Antonis Samaras said the debt deal "perpetuated" mistakes that drove the country into recession.

"We are not closer to the solution, but are faced with nine more years of collapse and poverty. Neither the economy nor society can withstand this," Samaras said.

Prominent left-wing deputy Dimitris Papadimoulis said the agreement would doom Greeks to a deeper recession.

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"The deal puts Greece in a eurozone quarantine," he said. "We are now locked in a system of continuous austerity, haphazard privatization, and continuous supervision by our creditors."

He also noted an inherent conflict of interest in the European debt plan.

"Those who monitor us do not have our interests in mind. Their priority is that we pay back our loans," Papadimoulis said.

Some analysts also appeared critical of Thursday's deal, worried that it might failed to improve the sustainability of Greece's euro350 billion ($490 billion) national debt.

"There's absolutely nothing in the package that was agreed that gives us even a modicum of hope that anything along the lines of (economic) development is happening," Yanis Varoufakis, professor of economics at the University of Athens, told AP television.

"We have more austerity and more wishful thinking in terms of how much liquidity can be extracted from the Greek economy, either through privatization or through taxation, in order to pay for these deals," he added.

In the northern city of Thessaloniki, the government did not send a representative to an annual high school parade, a day after anti-austerity protesters there heckled and threw eggs at the country's defense minister.


Associated Press writers Nicholas Paphitis, Elena Becatoros and APTN producer Theodora Tongas in Athens, and Costas Kantouris in Thessaloniki contributed.