Greek PM pushes more austerity
STORY HIGHLIGHTS
- NEW: Demonstrators in front of Parliament protest the proposed deal
- Approval will pave way for a $172 billion bailout deal
- Greece needs the funds to meet debt repayments due next month
- The country has come close to default before
Athens, Greece (CNN) — Police stepped up security in Greece’s capital as lawmakers debated austerity measures Sunday.
Demonstrators in front of Parliament protested the proposal to cut government spending, wages and pensions in return for a new eurozone bailout of the debt-stricken country.
Members of Parliament were expected to vote later Sunday on the measures, which would pave the way for the eurozone finance ministers to sign off on the new €130 billion ($172.6 billion) bailout deal.
Greece needs the funds in order to meet €14.5 billion in debt repayments due next month.
Prime Minister Lucas Papademos has urged approval of the deal, warning in a speech to the Cabinet Saturday evening of “social explosion, chaos” if it fails.
“The state will not be able to pay salaries and pensions or import basic goods” such as medicine and fuel, he warned, adding that “unemployment, which is currently unacceptably high, would increase even higher.”
Ultimately, Papademos said, if parliament rejects the deal, Greece — already in the midst of a prolonged recession — would be “bankrupted and out of the eurozone.”
But protesters criticizing the plan have demonstrated for days.
On Saturday, some isolated scuffles broke out as protesters rallied in Syntagma Square, in front of the Parliament building, but the mood was calmer than a day earlier.
Friday’s protest dispersed after youths smashed pavements and began throwing stones and pieces of marble, as well as Molotov cocktails, at the police, who responded with stun grenades and teargas.
Even if the sweeping reform package agreed to by Greece and the so-called troika — made up of the European Commission, European Central Bank and International Monetary Fund — is approved Sunday in parliament, Greek lawmakers must still do more.
Jean-Claude Juncker, the prime minister of Luxembourg and head of the Eurogroup, which brings together euro-area finance ministers, said Thursday that other assurances were also needed from Athens before the bailout could be paid out.
Greece’s political leaders must pledge that they will continue to implement the measures after upcoming elections, he said.
Athens must also find a further €325 million in “structural expenditure” cuts for 2012, Juncker added.
The bailout deal, which would result in significant losses for bondholders, is intended to help reduce Greece’s debts to 120% of Gross Domestic Product by 2020, from about 160% currently.
Greece, which owes some €330 billion, has come close to default before.
The nation has struggled to follow through on austerity measures and economic reforms that were a condition of its 2010 bailout package. At the same time, the Greek economy has been in recession for years and many analysts warn that additional austerity could make the situation worse.
CNN’s Antonia Mortensen, Elinda Labropoulou and Per Nyberg contributed to this report.
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