August 18, 2022

Greece Strives for Consensus on New Austerity Package

Prime Minister George Papandreou failed to find common ground with opposition leaders in individual meetings on Tuesday, and is hoping that the joint session, convened by President Karolos Papoulias, might achieve some kind of cross-party agreement on measures that are sure to be unpopular.

The aim is to convince officials of the European Union and International Monetary Fund that Greece has the political will to impose more tax hikes and spending cuts on a Greek public already weary after a year of belt-tightening.

Local media reported that Mr. Papandreou might propose a Cabinet reshuffle that would lead to some officials that are not from the ruling Socialist party being brought into the government. This could bring round Antonis Samaras, head of Greece’s main conservative opposition New Democracy, who has so far resisted any new tax increases in favor of stepping up the pace of privatizations — something many Socialists, and their supporters in labor unions, have resisted.

The meeting comes amid mounting speculation about the Greek government’s ability to avert a default, which would likely spark a new financial crisis across the euro zone.

On Thursday, the head of the group of euro-zone finance ministers, Jean-Claude Juncker, reiterated that the European Union would be unlikely to step in if the International Monetary Fund withholds its portion of a fifth installment of emergency funding to Greece — €12 billion, or $17 billion, scheduled to be disbursed next month. (The E.U. and I.M.F. pledged Greece a total of €110 billion in loans last May to save the country from defaulting.)

Greece’s lenders are demanding additional measures after the country missed its deficit-reduction target for 2010, putting the goals for this year and beyond further out of reach. A mission from the European Commission, the I.M.F. and the European Central Bank is currently compiling a much-anticipated report on the Greek government’s progress, after which European ministers will have to decide how to react.

This week the Greek media has been dominated by speculation about snap elections or the possibility of a return to the drachma. The European Marine Affairs Commissioner Maria Damanaki, who is a Greek Socialist, added fuel to the fire when she suggested on Wednesday that talks are already taking place about Greece’s possible exit from the euro zone.

“The scenario of Greece distancing itself from the euro is on the table. We either agree with our creditors on a program of tough sacrifices that brings results, and assume the responsibilities for our past, or we return to the drachma,” she said.

A spokeswoman for the European Commission in Brussels said Ms. Damanaki was using a “figure of speech” to make a point.

Apart from tax increases and public spending cutbacks, the Greek government’s proposed austerity program also includes a privatization drive that foresees sales in stakes of state utilities and assets including the state telecommunications company OTE.

On Friday, Deutsche Telekom, which already has a 30 percent stake in OTE, confirmed the receipt of a letter from the Greek finance ministry asking to arrange talks to discuss increasing its stake.

Under the original 2008 sale agreement, the Greek government has the right to sell an additional 10 percent stake in OTE to Deutsche Telekom through a put option at a set price.

The Greek government is reportedly interested in selling an additional 16 percent, and Deutsche Telekom has the right of first refusal on any new share sales.

Anna Bischof, a spokeswoman for Deutsche Telekom in Bonn, Germany, said the letter did not trigger the put option, but was a request to open discussions.

“I can’t speculate on what will come out of these talks,” Ms. Bischof said. “We just received the letter yesterday.”

A few dozen employees of the phone company protested a further sell-off by blocking one of Athens’s busiest roads, in front of the company’s headquarters, during the morning rush hour Friday.

Larger protests have been held over the past three days as Greeks, facing a deepening recession and mounting unemployment, seek to air their grievances.

Thousands were expected to fill the central square in Athens and in other major cities for the third day in a row on Friday for demonstrations inspired by a similar campaign in Spain.

Like the Spanish initiative, the Greek rallies have been organized by word-of-mouth using social networking sites and without the involvement of the unions, which usually lead protests in Greece.

Unlike the Spanish campaign however, where thousands have camped out in main squares for the past two weeks, the turnout has been average by Greek standards — with crowds hovering between 10,000 and 20,000 in Athens and hardly a tent in sight.

Kevin J. O’Brien in Berlin and Stephen Castle in Brussels contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=36344ecf29ead27f1da7568ad164bd25

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