Greece heads for standstill before austerity vote

Greece faces a crucial test this week, when much of the country is expected to be shut down by a 48-hour strike reaching a peak on Thursday as parliament votes on a sweeping package of austerity measures demanded by international lenders.

Greece’s two main unions, representing about half the four million-strong workforce, have promised one of the biggest strikes since the crisis began two years ago, hitting food and fuel supplies, disrupting transport and leaving hospitals run by skeleton staff.

Prime Minister George Papandreou, trailing badly in opinion polls, has defied the protests, pledging to push through a deeply unpopular package that includes tax rises, pay and pension cuts, job layoffs and changes to collective pay deals.

His four-seat majority is expected to hold up with the support of smaller opposition parties, but at least two members of the ruling PASOK party may oppose part of the bill when the vote is called, probably in two stages on Wednesday and Thursday.

With European Union leaders racing to prepare a comprehensive new bailout deal in time for a summit on October 23, Finance Minister Evangelos Venizelos said this was the week “during which many things, maybe everything will be decided.”

Trapped in deep recession and strangled by a public debt equivalent to some 162 per cent of gross domestic product, Greece has been shut out of bond markets and would run out of money within weeks without international support.

Many economists believe Athens can no longer avoid defaulting on its debt, but in a newspaper interview on Sunday, Papandreou said a default would be a “catastrophe” for Greece.

Inspectors from the EU and the International Monetary Fund (IMF) were in Athens last week and have recommended releasing a vital euro 8 billion-aid tranche to enable the government to keep paying its bills past November.

That will only provide temporary relief and they urged Papandreou’s struggling Socialist government to push ahead with further belt-tightening, on top of what are already the deepest cuts in Greece’s postwar history.

Papandreou was scheduled to meet President Karolos Papoulias this morning and hold an informal cabinet meeting in the afternoon to brief them on the Greek debt talks.

VIOLENCE
Memories are still fresh of the violent clashes between riot police and anti-austerity demonstrators in June, and police will be ready to crack down on signs of trouble during the strikes this week.

“We are fully aware of the huge changes in people’s lives and the problems the economic crisis poses to public services,” the ministers for health, education and transport said in a joint statement published on their websites.

“But either we do everything now or we face disaster,” they said, calling for unity from all PASOK deputies.

“Obstructing the operations of the state in sensitive sectors is an attempt to worsen conditions and undermine the fight the country and its citizens are engaged in.”

The strike on Wednesday and Thursday will hit public sector institutions including tax offices, state schools and airports as well as banks and businesses ranging from taxis and clothes shops to suppliers of everyday staples like bakers.

Even judges will hold indefinite stoppages, only issuing rulings on major cases.

Customs officials who clear fuel refinery deliveries hold a 24-hour strike today and will decide whether to extend their action, potentially hitting petrol supplies.

A 48-hour strike by seamen, starting today, has brought passenger ferries to a halt, disrupting traffic to the country’s dozens of islands. “Leave the seamen and their pensions alone, there’s too few of us left anyway,” George Nikolaidis of the seamen’s union told a private radio station.

Public transport services in Athens are expected to be operating at least some services to ferry demonstrators to the main site of the protest in Syntagma Square, outside parliament.

Papandreou’s ruling PASOK party has seen its ratings drop sharply in recent months as it meets the tough terms imposed in return for EU and IMF aid, while state buildings have been occupied and groups ranging from taxi drivers to lawyers and municipal workers stage daily protests.