The new Greek government, fresh from a confidence vote victory, got to grips fast on Wednesday with massive EU-IMF imposed budget reforms to stave off a wider eurozone debt crisis.
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| Greek Prime Minister George Papandreou (right) shakes hands with Finance Minister Evangelos Venizelos after winning a confidence vote. |
The measures include a vast privatisation programme to raise 50 billion euros, but public opinion is distressed and some sections are deeply opposed to the strategy.
The privatisation initiative was initially announced in February, and the delay means that Greek authorities must hold a sale every 10 days on average this year.
But Greece\'s main unions plan to hold a 48-hour general strike when the new austerity plan heads for parliamentary approval.
"This is a policy of unfair measures against those who have already footed the bill," Yiannis Panagopoulos, head of the largest Greek union GSEE, told Flash Radio.
"It is also an ineffective policy as it is clear that the country is sinking into recession," he said.
With global markets watching anxiously to see if EU authorities can contain the fires of the Greek crisis, the euro eased in response to the overnight confidence vote to $1.4376 in Tokyo from $1.4408 in New York on profit-taking, dealers said.
The inner cabinet was geared to meet under Prime Minister George Papandreou in the afternoon to approve a law for an austerity drive worth more than 28 billion euros ($40 billion) by 2015, his office said.
At stake is another critical vote on June 28 to approve the cuts and privatisations to obtain a slice of the rescue loan agreed a year ago.
Without this immediate cash, Greece would not be able to pay its housekeeping bills next month, threatening a new and vicious twist to the eurozone debt crisis.
Also at stake is negotiation of a new huge rescue to avert default in the longer term, which Germany insists must be tied to participation by banks and funds holding Greek debt.
Top Greek ministers were set for a meeting before mid-day on Wednesday to discuss a two-day European Union summit starting on Thursday which will be overshadowed by these risks of deep disturbance on European and even global markets.
The European Union, which last year rescued Greece from bankruptcy with a huge loan supported by the International Monetary Fund, set an ultimatum for Greece at the weekend that it must deepen and accelerate reforms to qualify for the immediate loan instalment of 12 billion euros ($17 billion).
New Finance Minister Evangelos Venizelos, appointed on Friday, hit hard in parliament on Tuesday.
"We have to pass two laws by June 30 so that procedures at the Eurogroup will move on July 3, enabling the IMF to decide to release the fifth loan instalment on July 8," Venizelos said.
Overnight, Papandreou\'s government successfully mobilised its slim majority in the 300-seat parliament to weather a vote of confidence.
But although the Socialist group passed the test without defections, many lawmakers gave no indication that they will also approve the reform drive, which has caused mounting social unrest.
At least two government deputies have threatened to vote against the sale of large stakes in public companies in their respective constituencies.
"Government secures mandate for critical decisions," financial daily Naftemboriki said on Wednesday, noting that the vote "gives a clear indication that the midterm plan and application law will (also) be approved so that the fifth loan slice will be disbursed."
Leftist Eleftherotypia took a harsher view, speaking of a "rapid submission" of parliament without a real debate on the measures.
Thousands of protesters gathered outside parliament during the confidence vote procedure on Tuesday, booing the government\'s lawmakers.
Riot police deployed outside the building used tear gas after the vote to disperse a group of protesters who pelted them with bottles and stones.
Struck with repeated downgrades of its sovereign debt status by rating agencies, Greece has been unable to raise new long-term loans.
The finance ministry has warned that Greece\'s treasury only had adequate funds to July 18 to meet payment obligations.
Most analysts argue that Greece will be ultimately unable to avoid defaulting on a debt currently exceeding 350 billion euros.
Rating agencies warn that even a supposedly voluntary debt restructuring could amount to default, and the European Central Bank has warned that if the crisis worsens it might have to cut off lifeline support for the Greek banking system.
