April 20, 2024

Greek Government Struggles to Win Support for More Austerity

ATHENS — Despite pressure from lenders for Greece to show a unified front in solving its debt crisis, Prime Minister George Papandreou had little apparent success Tuesday in persuading his political rivals to back additional tax increases and spending cuts.

The Socialist government has sought to respond to charges of foot-dragging by its European partners by announcing new initiatives to raise revenue, in order to secure the next installment of emergency funding from the European Union and International Monetary Fund.

Late Monday, the government said that it would proceed “immediately” with the sale of stakes in the telecommunications operator O.T.E., the country’s main ports of Piraeus and Thessaloniki and the state-owned Hellenic Postbank. The Finance Ministry would not say how much it aimed to raise.

On Tuesday, Mr. Papandreou met with opposition leaders, trying to win support for a broader program of “additional measures,” amounting to €6 billion, or $8.45 billion, to reduce Greece’s budget deficit to 7.5 percent of gross domestic product this year — from 10.5 percent in 2010 — despite double-digit unemployment and a deepening recession.

The Finance Ministry refused to disclose details of the additional measures, saying that they would be final only after Mr. Papandreou’s talks with the opposition and discussions this week with visiting representatives of the E.U. and I.M.F.

They have, however, been the subject of feverish speculation in the Greek press. Among the measures under consideration, according to the reports, are an increase in the road tax; raising the value-added sale tax on certain goods and services that now enjoy a reduced rate; imposing taxes on natural gas and soft drinks; and abolishing additional tax breaks. The introduction of a tax on pensions above a certain level is also believed to be in the cards.

The ruling Socialists have a comfortable six-seat majority in the 300-seat Parliament and should be able to pass the measures without the support of the opposition. But Greece’s creditors have been pressing Mr. Papandreou to seek consensus for the deeply unpopular reforms before presenting them to a Greek public weary of a year of austerity, arguing that some degree of political consensus would make implementation easier.

The European Economic and Monetary Affairs Commissioner Olli Rehn last week held up the example of two other euro-zone countries with debt problems where some cross-party agreement had been reached on austerity packages. “It is possible for Portugal and Ireland, why not Greece?” Mr. Rehn said.

However, Antonis Samaras, the head of New Democracy, the main conservative opposition in Greece, has repeatedly dismissed the government’s proposed reforms as “demonstrably wrong.” Earlier this month, Mr. Samaras presented an alternative fiscal program that calls for lowering taxes but moving faster on privatization, including the sell-off of the country’s biggest electricity producer, P.P.C.

The government has yet to make a move on P.P.C.; the ruling Socialists traditionally have strong ties with its labor union.

After meeting the prime minister on Tuesday, Mr. Samaras said additional tax increases would “suffocate” the sluggish Greek economy.

“We will not back this erroneous economic program,” Mr. Samaras said. “What is needed is a creative shock through the reduction of taxes. We say yes to privatizations but no to measures of fiscal panic.”

The response from leaders of Greece’s leftist parties was even colder. The head of the Communist Party, Aleka Papariga, refused to meet the premier, saying their views were “diametrically opposed.” The leader of the radical left Syriza party, Alexis Tsipras, described the proposed reforms as “a crime against the Greek people” and called for Mr. Papandreou to step down.

As the prime minister continued his meetings, the government spokesman George Petalotis said the ruling party was only interested in “proposals that will reduce the deficit.” He added that the first wave of privatizations would be carried out “soon.”

Greek unions announced plans for another one-day protest strike next month.

Article source: http://feeds.nytimes.com/click.phdo?i=52864d75477d7ed2973139487e58f665

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