Greek protests turn violent

Greek protests turn violent

EU warns lawmakers that country faces default unless it approves austerity plan

Hooded youths throwing stones and wielding sticks set fire to garbage bins and a telecoms truck outside parliament and riot police fired teargas to disperse them. Trade unions began a 48-hour strike against the EU/IMF-imposed measures.

Progress was meanwhile reported in talks to persuade European banks and insurers to voluntarily roll over maturing Greek debt as part of a planned second rescue package designed to give the euro zone country a breathing space. But the EU’s top economic official, Olli Rehn, stressed that any further assistance for the debt-crippled nation hinged on parliament adopting a raft of spending cuts, tax rises and privatisations in crucial votes on Wednesday and Thursday.

“The only way to avoid immediate default is for parliament to endorse the revised economic programme... They must be approved if the next tranche of financial assistance is to be released,” he said in a statement.

“To those who speculate about other options, let me say this clearly: there is no Plan B to avoid default,” Rehn said, dismissing widespread reports that Brussels was working on a fallback plan to keep Greece afloat.

The blunt alternative was underscored by Bank of England Governor Mervyn King, who told British parliamentarians that policymakers were working on ways to limit the damage from a potential default on Greece’s 340 billion euro debt pile.

“What we’re doing is to say there is sufficient concern in the market about the possibility of default for us to think about contingency plans and the consequences of this event,” King said.

He urged greater transparency about sovereign exposures to prevent a sudden, broad-based loss of confidence in European banks in the event of a Greek default, which could trigger a new credit crunch.

Trade unions promised to fill the streets of central Athens and surround parliament from Tuesday to try to prevent lawmakers approving the painful measures.

“We expect a dynamic and massive participation in the strike and the march to the centre of Athens. We will have 48 hours of working people, unemployed, young people in the streets,” said ADEDY public sector union leader Spyros Papaspyros.

Some 5,000 police have been drafted in, mostly to protect the colonnaded parliament building on Syntagma Square, focal point of weeks of mass demonstrations, some modeled on the encampment of unemployed Spanish “indignados” in Madrid. By the standards of past Greek political violence, Tuesday’s clashes were relatively minor.

The EU and IMF have said that Greece must enact both the five-year austerity plan, with 28.6 billion euros in savings, and key implementing laws for structural reforms and state asset sales to secure the next 12 billion euro slice of aid in July. Without that, Athens would run out of money within weeks.

Debt rollover


The premium investors charge for holding Greek and other peripheral euro zone debt rather than German bonds narrowed on news that German banks had agreed in principle to use a French proposal as a basis for negotiating private-sector participation in a Greek debt rollover.

Prime Minister George Papandreou’s Socialists hold a narrow majority with 155 seats in the 300-member legislature, but a handful of lawmakers have defected and others are threatening to vote against some or all of the measures, putting the outcome in doubt.
New Finance Minister Evangelos Venizelos, a PASOK party heavyweight, has tried to woo wavering backbenchers by promising a renegotiation of the balance of the program toward promoting economic growth in September.

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