Greek government fends off attacks on austerity, to vote in June

Reuters News
Posted: Jun 10, 2011 7:18 AM
Greek government fends off attacks on austerity, to vote in June

By Dina Kyriakidou and Harry Papachristou

ATHENS (Reuters) - The Greek government defended its new austerity package from attacks in parliament on Friday, saying it was the only way to stave off bankruptcy, and vowed to pass it into law before the month is out.

The ruling socialist party has 156 deputies in the 300-seat house but growing numbers of its members are expressing unease.

Finance Minister George Papaconstantinou said the government was considering submitting a new tax bill in September cutting VAT and corporate taxes, a move aimed at bending the resistance of the main opposition New Democracy party to the measures.

"We begin this discussion now and we will invite other parties to participate," he told a news conference.

Anxious to pass a mid-term economic plan which imposes years of more austerity in the face of labor strikes, mass street protests and dissidents within his own ruling Socialist party, Prime Minister Papandreou said Greece had no choice.

"The medicine is not pleasant and the treatment requires devotion and commitment," he told parliament. "No prime minister of any country wants to go out with a beggar's tray and collect money from other countries ... I certainly don't but I do it for Greece."

Papandreou is fighting hard to rally not only opposition parties but also his reluctant PASOK party behind the economic plan, a condition for getting more aid from international lenders who bailed out Greece last year with a 110 billion euro ($160 billion) loan.

"We will support nothing proposed by this government, which failed with the simple task last year and now is called to tackle an even more difficult task," far right LAOS party leader George Karatzaferis told Papandreou.

European officials are still trying to work out a plan which hits private investors for some of the cost of the new funding plan, expected to be worth around an additional 120 billion euros including 30 billion from sales of Greek state assets.

EU officials have asked for wider political consensus in Greece before they give the debt-ridden euro zone member more cash but the main opposition has vowed to vote against the new measures, saying they are chocking economic growth.

Figures on Thursday showed the economy is in worse shape worse than initially feared, with gross domestic product tumbling 5.5 percent year-on-year in the first quarter.

Unions have called for a nationwide strike for June 15, on top of almost daily marches from staff in companies earmarked for privatization and two weeks of grassroots nightly demonstrations in a central Athens square.

(Additional reporting by Angeliki Koutantou; Writing by Dina Kyriakidou; Editing by Mike Peacock)