Wednesday, February 10, 2010

[olympiaworkers] Greek unions strike over deficit-slashing measures

By ELENA BECATOROS and AOIFE WHITE, Associated Press Wed Feb 10, 2010

ATHENS, Greece – Greek workers shut down schools, grounded flights and
walked out of hospitals Wednesday to protest austerity measures brought on
by the nation's staggering debt, as European leaders wrangled over whether
and how to come to the country's financial rescue.

Greece's prime minister headed to a European Union summit where leaders
will take up the debt crisis Thursday. Greece's fiscal problems have
shaken the euro and underscored the interconnectedness of the global

European stocks rose on hopes for a rescue plan that might take pressure
off other struggling eurozone countries such as Portugal and Spain, but it
is unclear what wealthier EU nations will do to help Greece.

The EU's largest economies, Germany and France, are ready to offer their
support to Greece at the summit but will wait to see if other countries
join the effort, a French diplomatic official said in a briefing ahead of
the summit. The official, who spoke on condition of anonymity because of
the sensitivity of the issue, did not provide specifics.

"Here's the message: we are behind Greece," the official said. "I don't
think (financial) aid needs to be extended to Greece tomorrow; I think a
message needs to be given to markets that we will know how to resolve the
Greek question."

Officials in Germany said there is no urgent need for a bailout at the
moment and that "no decision on such help" is imminent. They also said EU
rules prohibited them from guaranteeing another country's debts.

"Of course, we are running through worst-case scenarios," a German
government official said on condition of anonymity. "Greece has to present
a credible volume of cuts. Agreement on that would be an important signal
from tomorrow's summit."

The head of France's national assembly, Bernard Accoyer, said that
European countries must show solidarity with Greece.

"The reality is obvious to everyone. The issue is not to let Greece go
bankrupt," he said.

Greece came under intense EU pressure to slash spending after it revealed
a massive and previously undeclared budget shortfall last year that
continues to rattle financial markets and the euro, the currency shared by
16 EU members. Its deficit spiraled to more than 12 percent of economic
output — more than four times the eurozone limit — in 2009.

Prime Minister George Papandreou's new government has announced sweeping
spending cuts that will freeze salaries and new hiring, cut bonuses and
stipends and increase the average retirement age by two years to 63. The
government also announced new taxes, which it insists will increase the
burden on the rich but safeguard the poor.

European governments, initially reluctant to help Greece out of a crisis
it created itself, now appear ready to help after market concerns
intensified in recent days, dragging the euro down to an eight-month low
against the U.S. dollar and hitting stocks worldwide.

European stocks closed up Wednesday, and the spread, or interest rate
difference, between Greek and benchmark German bonds narrowed, indicating
that fears of Greek default in the bond market are waning.

Stephen Lewis, an analyst at Monument Securities, said financial markets
"are taking it for granted that support will be forthcoming and would
probably react negatively if the summit's outcome fell short of

If Greece were near default, it would hurt the euro, harm Europe's already
battered banking system and raise borrowing costs for governments across
the continent, and the aftershocks would be felt on Wall Street and in
markets around the world.

Papandreou, who was in Paris on Wednesday to meet French President Nicolas
Sarkozy, insisted that Athens is not asking for a bailout.

"We have not asked for help," he told Greek reporters in a briefing after
his meeting with Sarkozy. "We have said that we just want you to support
our will, the credibility of our country in the implementation of this

Speaking earlier, Papandreou insisted that his proposed austerity measures
will be fully implemented. "We are ready to take any necessary measures to
make sure the deficit goal is met," he said.

Papandreou's Socialists came to power last October and enjoy a strong
legislative majority. He has faced pressure from unions, with civil
servants walking off the job Wednesday in the first tangible widespread
backlash against the new austerity measures.

"It's a war against workers and we will answer with war, with constant
struggles until this policy is overturned," said Christos Katsiotis, a
representative of a communist-party affiliated labor union.

Yet despite the harsh rhetoric, turnout for demonstrations was relatively
low, with fewer than 10,000 strikers and retirees braving windy, drizzly
weather in Athens. Another 3,000 people showed up for two rallies in
Thessaloniki, Greece's second-largest city. Greece has seen tens of
thousands of people take to the streets in the past.

The subdued response suggests that many Greeks believe urgent action is
needed to save the economy.

"It's clear that the country is on the verge of bankruptcy, and if this
negative dynamic isn't controlled, we're going to pay a huge social and
financial price," said political analyst and publisher Giorgos Kyrtsos.

One weekend newspaper survey showed 70 percent of Greeks backed
Papandreou's call to cut the pay and perks of the country's roughly 27,000
civil servants, although they opposed measures that would affect them
individually such as new taxes or a higher retirement age.

"Everyone accepts the measures that don't affect them," Kyrtsos said.
"When they see that their family budget or their personal budget is
affected, then they react."

So a broader backlash could be yet to come. A strike much broader than
Wednesday's is planned for Feb. 24.

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