The Greek government failed on Tuesday to persuade doubters in the ruling Socialist party to back a new bailout deal with the EU and IMF, after the fund said the country could not afford to slacken the pace of reforms.
Unrest is growing in the governing PASOK party about a deal struck last Friday with Greece's international lenders, under which Athens has promised a new wave of austerity and faster privatization in return for the new bailout.
Finance Minister George Papaconstantinou got a rough ride when he tried to sell the plan to a committee of senior PASOK lawmakers at a marathon meeting, the latest stage in a drive to get the government's medium-term economic plan through parliament this month.
Vasso Papandreou, who chairs parliament's economic affairs committee, evoked French revolutionary Mirabeau in recounting what she had told Papaconstantinou at the meeting.
"When parliament is blackmailed, then democracy is blackmailed, according to Mirabeau," she told reporters. "You have no plan... What you are doing will not get you very far."
Public hostility is strong to the idea of yet more austerity, on top of measures agreed under Greece's original 110 billion bailout last year which have helped to send unemployment soaring to almost 16 percent. On Sunday more than 80,000 Greeks vented their anger at a protest in central Athens.
Tuesday's committee meeting went on for so long that a meeting of the PASOK political council due later in the day was postponed until Wednesday, and a cabinet meeting supposed to sign off on the plan and send it to parliament was likewise put back by a day from Wednesday to Thursday.
'THE FUTURE OF OUR COUNTRY'
Prime Minister George Papandreou says that clinching the new bailout, which still needs to be approved at an European Union summit later this month, is crucial for the future of the nation.
"The following days and weeks are critical," said Papandreou, who is unrelated to Vasso Papandreou.
"Today our decisions and our stance on the way to the summit will decide the future of our country, as negotiations with our partners have not been completed," a statement quoted the prime minister as telling a cabinet meeting late on Monday.
Papaconstantinou told the lawmakers on Tuesday that the extra austerity measures, amounting to 6.4 billion euros this year alone, were necessary not because the government had failed but because the recession was deeper than expected.
Greece is in its third year of recession, and economic output is forecast to shrink about three percent this year.
Government spokesman George Petalotis said MPs' suggestions would be taken into consideration. "The medium-term plan ... is a stepping stone for us to get back on our feet."
Greece's original rescue deal with the EU and International Monetary Fund a year ago assumed Athens could resume borrowing commercially in early 2012. This is now inconceivable as yields on Greek debt are sky high in the secondary market and Moody's has cut Greece's credit rating to the same level as Cuba's.
Earlier, a senior Greek official said he expected parliament to vote by the end of June on the medium-term plan. He also said the government planned to cut corporate tax, a demand of the conservative opposition, and lower value-added tax from 2012.
However, these measures would not be part of the medium-term economic plan, he told reporters. "Parliament will vote on the medium-term plan by the end of June. It will be voted on as a single article," he said, asking not to be named.
PASOK dissenters have already demanded that each part of the plan be handled in separate votes. Voting on a single package would prevent doubters from rejecting individual measures such as tax increases or sales of state assets.
A second official repeated government assurances that it would not seek early elections despite the daily mass protests.
The EU has called on all leading Greek parties to forge a consensus on the medium plan, which covers a period beyond the next scheduled elections in 2013.
REUTERS
