Greece bailout: Large protests expected against cuts

A protester waves a Greek flag in front of police in Athens. Photo: February 2012 Greece has recently seen the worst rioting in years

Greece is braced for large protests against further budget cuts, following a 130bn-euro (£110bn; $170bn) bailout deal aimed at avoiding bankruptcy.

There are fears of more violence during the rallies called by trade unions as the public mood hardens, a BBC correspondent in Athens says.

Meanwhile the government is finalising emergency legislation demanded by international lenders.

It says Greece has avoided a nightmare scenario by agreeing to the bailout.

The country has a week to approve a raft of spending cuts of more than 3bn euros tied to the bailout.

Emergency legislation, discussed by the Greek cabinet on Tuesday night, will be debated by MPs on Wednesday afternoon, although no vote is expected until Thursday.

The bill proposes cutting the current 751-euro minimum monthly wage by 22%, and also further cuts of pensions, reports say.

A key part of the bailout deal - the debt writedown by holders of Greek bonds - will be discussed at committee level before going to a vote by MPs on Thursday.

The protest against measures demanded by the IMF and other eurozone governments has been planned to coincide with Wednesday's session of parliament.

A week ago, Athens saw its worst rioting in years as MPs passed a series of deeply unpopular austerity measures.

Analysis

Greeks are a resilient people, well-versed in surmounting obstacles through their history. But that resilience is being sorely tested.

The country has been living with punishing austerity for much of the past two years: unemployment has reached record heights at over 21%, the economy contracted by 7% in the last quarter of 2011.

And now, with the bailout deal approved in Brussels, the cuts are set to get deeper still.

And Greeks are growing ever more doubtful that the path ahead will lead them out of this crisis. The government is acutely aware that support for the bailout and the austerity measures is costing it dearly in the opinion polls.

"Workers in our country refuse to accept the barbarity of the tougher neo-liberal measures that have been extortionately imposed by our creditors," the GSEE private sector trade union warned earlier this week.

Under Tuesday's agreement hammered out after marathon talks in Brussels:

  • Greece will undertake to reduce its debt from 160% of GDP to 120.5% by 2020
  • private holders of Greek debt will take losses of 53.5% on the value of their bonds, with the real loss as much as 70%
  • eurozone experts will permanently monitor Greece's economic management
  • a constitutional change will give priority to debt repayments over the funding of government services
'Daily struggle'

On Tuesday, Finance Minister Evangelos Venizelos said the deal had given Greece a new opportunity, and had "avoided the nightmare scenario".

George Papandreou speaking on BBC Hardtalk: ''We will not default and we will not exit the euro''

"What we have is the clear, explicit commitment of our peers that they will support us even after the end of the programme, until Greece returns to the markets," he said.

Opinion polls suggest that the two parties in the coalition government, which currently dominate parliament, are facing huge losses at the next election, scheduled for April.

Athens and EU flag What went wrong in Greece?

What went wrong in Greece?

An old drachma note and a euro note
Greece's economic reforms, which led to it abandoning the drachma as its currency in favour of the euro in 2002, made it easier for the country to borrow money.

What went wrong in Greece?

The opening ceremony at the Athens Olympics
Greece went on a big, debt-funded spending spree, including paying for high-profile projects such as the 2004 Athens Olympics, which went well over its budget.

What went wrong in Greece?

A defunct restaurant for sale in central Athens
The country was hit by the downturn, which meant it had to spend more on benefits and received less in taxes. There were also doubts about the accuracy of its economic statistics.

What went wrong in Greece?

A man with a bag of coins walks past the headquarters of the Bank of Greece
Greece's economic problems meant lenders started charging higher interest rates to lend it money. Widespread tax evasion also hit the government's coffers.

What went wrong in Greece?

Workers in a rally led by the PAME union in Athens on 22 April 2010
There have been demonstrations against the government's austerity measures to deal with its debt, such as cuts to public sector pay and pensions, reduced benefits and increased taxes.

What went wrong in Greece?

Greece's problems have made investors nervous, which has made it more expensive for other European countries such as Portugal to borrow money.
Eurozone leaders are worried that if Greece were to default, and even leave the euro, it would cause a major financial crisis that could spread to much bigger economies such as Italy and Spain.

What went wrong in Greece?

Greek Prime Minister George Papandreou at an EU summit in Brussels on 26 March 2010
In 2010, the EU, IMF and ECB agreed a bailout worth 110bn euros (�92bn; $145bn) for Greece. Prime Minister George Papandreou quit the following year while negotiating its follow-up.

What went wrong in Greece?

Lucas Papademos
Lucas Papademos, who succeeded Mr Papandreou, has negotiated a second bailout of 130bn euros, plus a debt writedown of 107bn euros. The price: increased austerity and eurozone monitoring.
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Parties on the far left and far right, which are set to make big gains, are opposed to the bailout deal.

The head of the opposition Communist party has vowed to oppose new cuts.

"We insist on daily struggle to thwart the measures and this struggle cannot be a defensive one," said Aleka Papariga.

Eurozone leaders hailed the deal as a triumph, and said it had saved Greece from going bankrupt.

Former Greek Prime Minister George Papandreou told the BBC's Hardtalk programme that Greece had made major sacrifices and deserved more respect from international analysts and financial markets.

"We have made major sacrifices in Greece," he said.

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