The Greek government warned dissenters in the ruling party on Wednesday against rejecting an austerity plan agreed under a new international bailout deal, after data showed the depth of the nation's economic crisis.
Prime Minister George Papandreou met senior members of his socialist party to try to stem an outbreak of unrest over the social cost of the bailout before it turns into a full-scale parliamentary rebellion.
Tens of thousands of Greeks are protesting regularly against waves of austerity demanded by the European Union and IMF, as well as against corruption and state mismanagement. Workers at state firms earmarked for privatisation have called a strike for Thursday.
But Papandreou told his PASOK party's political council that the extra austerity included in a new 2011-2015 fiscal plan, which will be submitted to parliament this month, is necessary to stem the crisis.
"The time has come to move with greater boldness ... always in a democratic way but with determination and unity in the great changes the country needs," he said. "This means that we must proceed responsibly in finishing and passing the medium-term plan."
Greece has agreed to 6.8 billion euros worth of extra austerity measures for this year and more savings up to 2015 to cut deficits, an EU/IMF document obtained by Reuters on Wednesday showed.
The plan also lays out years of austerity and faster privatisation, agreed with the EU and IMF to secure the second financial rescue in just a year.
PASOK says it inherited the debt and budget crisis when it defeated the conservative New Democracy party in 2009, but has repeatedly stressed it aims to serve its full four-year term.
"For us it would have been very easy to say 'Let's have elections, why carry this bomb we inherited to the end'?" government spokesman George Petalotis told Real FM radio. "Elections would have worse consequences for the country."
Opinion polls show PASOK's lead over New Democracy has vanished, suggesting that new elections could produce a stalemate during which the latest IMF/EU rescue could unravel.
Greeks are suffering. Unemployment climbed to 16.2 percent in March, the highest in the euro zone after Spain, data showed on Wednesday. Industrial production tumbled 11.0 percent year- on-year in April as Greece suffers its third year of recession, public spending cuts and higher taxes.
MORE BAD NEWS?
More bad news is likely on Thursday when economic output data for the first quarter is released. An earlier flash estimate showed GDP shrank 4.8 percent from the first three months of last year, on top of sharp drops in 2009 and 2010.
Sales of state assets to help reduce Greece's 340 billion euro government debt form a central part of the medium-term plan, but workers are putting up a fight.
Employees of state companies slated for privatisation, such as power utility PPC , telecoms company OTE and water companies EYDAP and EYATH , will walk off the job for 24 hours on Thursday.
Greece's main private and public sector unions, GSEE and ADEDY, have called on workers and the elderly -- whose pensions have been cut -- to rally in central Athens.
Until now dissent has been muted among the ruling Socialists. But Greeks have staged nightly protests for a fortnight in the capital's Syntagma Square to hurl abuse at the parliament building, with numbers hitting over 80,000 on Sunday.
Many PASOK backbench members of parliament appear to be taking fright. Finance Minister George Papaconstantinou suffered a roasting when he presented the medium-term plan to senior party members at a meeting that lasted about 12 hours.
Greece, which has a huge budget deficit but has been frozen out of debt markets for a year, seems to have no alternative but to depend on the EU and IMF and accept their demands.
One PASOK lawmaker, Paris Koukoulopoulos, recognised that the minister's report on achievements so far had been sincere. "But what's important is that we have emptied the banks of deposits and filled the city squares with people," he said.
Newspapers reported that Papandreou had ordered his finance minister to take the attacks on the chin and allow the backbenchers to vent their rage, in the hope that they will cool down eventually and vote for the plan.
The government wants parliament to decide on the plan before the end of this month. Many PASOK lawmakers would risk losing their seats if early elections were held, meaning that they may have second thoughts about voting against it.
REUTERS
