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Berlusconi Resigns After Italy’s Parliament Approves Austerity Measures

November 13, 2011 by Leave a Comment

His exit, a sudden fall after months of political stalemate, paves the way for a new government of technocrats led by Mario Monti, a former member of the European Commission. Mr. Monti is likely to be installed in the next few days, following the apparent consent of key blocs of Mr. Berlusconi’s center-right coalition.

His resignation came just days after the fall of Prime Minister George A. Papandreou in Greece. Both men were swept away amid a larger crisis that has threatened the entire European Union, in which roiling financial markets have upended traditional democratic processes.

Though it was met by cheering crowds in Rome, the end of Mr. Berlusconi’s 17-year chapter in Italian politics, characterized by his defiance and fortitude, sets off a jarring political transition. “This is the most dramatic moment of our recent history,” Ferruccio de Bortoli, the editor of the Milan daily newspaper Corriere della Sera, said Saturday.

After borrowing rates on Italian bonds soared last week to levels that have required other euro zone countries to seek bailouts, Mr. Berlusconi pledged to step down after the Italian Parliament approved austerity measures sought by the European Union.

The lower house gave their final approval to some of the measures on Saturday afternoon, and two hours later, he officially submitted his resignation to President Giorgio Napolitano.

An impromptu orchestra and choir gathered outside the presidential palace, where Mr. Berlusconi resigned, playing the “Hallelujah” chorus from Handel’s “Messiah.”

Hundreds of spectators gathered outside, shouting “buffoon” and “go home” to a polarizing leader once loved by many, making Mr. Berlusconi the very embodiment of the Italian saying that the tenor is applauded until he is booed off stage. Some in the crowd were popping bottles of champagne. And cars and mopeds in downtown Rome waved Italian flags and honked their horns in celebration, as they do when the national soccer team wins.

Fulvia Roscini, 47, a nurse, had brought her 8-year-old son and 13-year-old daughter outside the prime minister’s office on Saturday evening. “We came here because I wanted my kids to see this,” she said, “to see that another country is possible and is already here.”

As he left his residence on Saturday before resigning, Mr. Berlusconi waved to crowds of supporters, but he left the presidential palace through a secondary exit, to avoid the crowds.

Mr. Berlusconi did not speak publicly after resigning. But the ANSA news agency quoted him telling aides that the jeering “is something that deeply saddens me.”

In a statement, Mr. Napolitano, who as head of state will oversee the transition, said he would hold consultations with party leaders to nominate a new prime minister on Sunday.

In this case, the discussions will likely be a formality. For days, Mr. Monti, 68, a well-respected economist with close ties to European Union officials, has been identified as the front-runner.

Mr. Monti met on Saturday with Mr. Berlusconi and earlier in the day with Mario Draghi, the recently installed president of the European Central Bank, reinforcing the notion that financial and European institutions supported Mr. Monti’s appointment.

The mandate of the next government will be to push through measures to help reduce Italy’s $2.6 trillion public debt and increase growth to keep the country competitive.

The austerity measures approved by lawmakers include selling state assets and increasing the retirement age to 67 from 65 by 2026. They would also decrease the power of professional guilds, privatize municipal services and offer tax breaks to companies that hire young workers.

Key political parties, with the exception of the Northern League, an important member of Mr. Berlusconi’s center-right coalition, have said they will support Mr. Monti.

But the wrangling over crucial details is not over. Italy’s political parties are fighting to maintain their positions in future political constellations and to ensure their re-electability after passing unpopular measures demanded by tough economic times.

Some members of Mr. Berlusconi’s coalition want early elections to form a new government with a new mandate. But the main opposition party and other lawmakers, fearing that elections would lead to an unsustainable period of market turmoil, support a transitional government.

The prospect of early elections diminished on Saturday, however, when Mr. Berlusconi’s party said in a statement that it would support a Monti government. But they added that they awaited the “names of the cabinet members, the program of the new government and the timing of the mandate.”

The events in Greece and Italy this month raised concerns across the Italian political spectrum about the growing power of financial markets to shake governments. In Italy and elsewhere, a dysfunctional political class has been “impotent” in the face of market dynamics and their impact on people’s lives, the commentator Luigi La Spina wrote Saturday in the Turin daily newspaper La Stampa.

The atmosphere in downtown Rome on Saturday evening was one of celebration mixed with uncertainty.

“I know that the crisis won’t be over just because he leaves, and I’m a bit concerned about what will happen with the markets, but I know that this country will be better without him,” said Isabella La Monica, a retiree, who was waiting in front of the prime minister’s residence. “Things can’t get any worse.”

Gaia Pianigiani contributed reporting.

Article source: http://www.nytimes.com/2011/11/13/world/europe/silvio-berlusconi-resign-italy-austerity-measures.html?partner=rss&emc=rss

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Protests in Greece Over New Austerity Bill

October 20, 2011 by Leave a Comment

But what was different on Wednesday, the first day of a two-day general strike before Parliament voted in the evening to approve new austerity measures, was the scale of the protest — tens of thousands of people — and the range of the demonstrators.

Although the demonstration was organized by leading labor unions, everyone from trash collectors, teachers, retired army officers, lawyers and even judges walked off the job to protest the government-imposed wage cuts and tax increases that they say are squeezing the debt-ridden country into penury.

“There’s no precedent for this,” said Anastasia Dotsi, 70, a retired bank worker who said anger had driven her out to protest. After two years of austerity measures, “we have been crushed as a people,” she said.

She said her son and daughter, who both work in the private sector, had not been paid in months and were struggling to pay their mortgages and support their families.

“I have never been a leftist; I voted for Pasok” — the Socialist Party of Prime Minister George A. Papandreou — “I consider myself a middle-class person,” she said. “But they’ve pushed us to become extremists.”

On Wednesday evening, as garbage fires smoldered in the streets, the Greek Parliament approved the new package of austerity measures — and secured crucial rescue financing — with all 154 governing party legislators in Greece’s 300-seat Parliament voting in favor.

The controversial bill includes cuts in wages and pensions as well as thousands of layoffs in the public sector — once a political third rail in Greece’s welfare state. It also changes collective bargaining rules to make it easier to hire and fire workers, a highly unpopular action that economists say is crucial to liberalizing Greece’s economy but that has little popular support.

The bill will not pass into law until a second vote — on the separate articles of the legislation — on Thursday. The measures are expected to pass, even over the reluctance of the governing Socialist Party, which helped build up the welfare state it is now charged with dismantling.

European Union leaders are preparing to meet Sunday to decide on the release of the next, $11 billion installment of aid to Greece, part of a $150 billion bailout engineered last year. They will also be looking at a much broader European rescue designed to protect the bloc should Greece default. Only that will avert a default next month that could shake the euro zone and reverberate through the global economy.

“The vote will boost our negotiating position; it will give us strength for the E.U. summit,” Mr. Papandreou said this week. The main goal for Greece, he added, is “to stay in the euro zone.”

But as Europe continues to debate the country’s fate, Greece’s government has lost its popular consensus. Economists and Greece’s foreign lenders say the austerity measures are required to modernize its economy, but they are deeply unpopular with Greeks.

“Now the only thing the government has managed to do is get people against them,” said Dimitrios Katsandris, 67, a pharmacist, who attended the demonstration in an elegant tweed jacket. “You see people with different interests, but now they are united against the government.”

On Wednesday, their anger was clear. Once demonstrators reached Syntagma Square, outside Parliament, around noon, some violent protesters transformed the otherwise peaceful demonstration into one of sustained street violence, throwing rocks at the police, setting trash cans on fire and smashing shop windows in nearby streets until well after dark.

The police estimated the crowd size at 80,000 people; some news Web sites put the number at more than 100,000. The authorities said 38 police officers and three demonstrators were hurt in Wednesday’s clashes. The Greek news media said at least six demonstrators were injured. The police said five people were arrested and 28 others detained briefly for questioning.

Shops, bakeries and gas stations closed, while public transportation was scaled back. Tax offices, courts and schools shut down, hospitals were operating with only emergency staff and customs officials walked off the job. Civil servants, who have been the most vociferous in their protests, continued sit-ins at ministries and state agencies.

The question on many minds was how long this state of affairs could last. As she stood at the base of Syntagma Square, Maria Sarrafidou, 53, a psychiatrist, said that she was seeing more patients in her private practice, but that they paid her less.

“Mostly panic disorders,” she said. “In the last two years I’ve seen children and adults. They have no hope for the future. They wait and wait; this is the most difficult part. They don’t know what’s going to happen.”

Article source: http://www.nytimes.com/2011/10/20/world/europe/greek-workers-start-two-day-anti-austerity-strike.html?partner=rss&emc=rss

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Greece Nears a Tipping Point in Its Debt Crisis

September 19, 2011 by Leave a Comment

FRANKFURT — Greek leaders struggled through the weekend to agree to a set of radical budget reductions that would satisfy foreign lenders’ demands even as they tried to stave off mounting resistance to those cuts at home.

Reflecting the urgency of the situation, Prime Minister George A. Papandreou canceled a planned trip to Washington this week and held talks with his cabinet on Sunday.

The Greeks face an October deadline to qualify for 8 billion euros, or $11 billion, in aid, without which Greece will certainly default on its growing debt. Over the weekend, European finance ministers issued stern warnings at a meeting in Poland that failure to meet financial targets would imperil the release of the payment.

The payment is just one installment in a larger package of 110 billion euros in aid agreed to by euro zone members in spring 2010; a second bailout fund, for 109 billion euros, was agreed to in July, though that has yet to be ratified.

To reach the financial targets, Greek leaders discussed a range of draconian layoffs and pay reductions among public sector workers. While these measures have long been planned, but never carried out, to the frustration of foreign lenders, the discussion of these cuts represented a marked change in approach for the Greek government, with the emphasis on reductions over revenue increases.

“Everyone wants a smaller state,” the finance minister, Evangelos Venizelos, said on Sunday.

More specifically, Greece officials are being pressed to put thousands of civil servants deemed to be “surplus” on a standby status at a reduced wage. The government has not yet pushed ahead with this measure, which is very unpopular in a country where nearly one million people out of a population of 11 million work for the government.

Several Greek news media outlets, including the influential center-left newspaper To Vima, on Sunday cited an internal government e-mail that set out priorities by Greece’s foreign creditors aimed at raising much-needed revenue quickly. These include cuts in the pensions of Greek sailors and employees of the state telecommunication company OTE, the immediate merger or abolition of 65 state agencies and the freezing of state workers’ pensions through 2015.

Adding to the Greeks’ dilemma is that the proposed cuts come as the Greek economy is contracting faster than expected. Last week, Mr. Venizelos warned that the economy would shrink much more sharply this year than anticipated — by 5.3 percent instead of the 3.8 percent originally forecast in May. The budget deficit is on track to reach 8.2 percent of gross domestic product this year, well ahead of the original estimate of 7.4 percent.

The original aid package requires Greece to reduce its deficit to 7.5 percent of gross domestic product this year, and below 3 percent by 2014, according to the International Monetary Fund.

The reduced number of workers employed in the public sector would only add to the difficulty of meeting these targets as payroll tax collections shrink.

Despite the dire circumstances, Mr. Venizelos denied rampant speculation that the country was on the brink of default.

Acknowledging that the mood in both Greece and the euro zone is “fluid and nervous,” he said the country was committed to taming its widening budget deficit and carrying out reforms, one of which is a new levy intended to ensure that property owners pay taxes, a persistent problem in a country beset by tax evasion.

Mr. Venizelos said that the government would make the long-delayed cuts to the public sector, though he also lashed out at “those intent on speculating against the euro and carrying out organized attacks on the heart of the euro zone.”

On Monday, Mr. Venizelos will have a chance to make his country’s case in a conference call with representatives of the foreign lenders known as the troika: the European Commission, the European Central Bank and the International Monetary Fund.

Public sector workers in Greece have shown little appetite for the cuts that have already been made, let alone those being proposed. Over the summer, protests have turned violent as workers have bristled at the new austerity measures.

In Germany, the mood seemed to be turning increasingly in favor of letting Greece fail rather than to bear the growing cost.

Wolfgang Schäuble, the German finance minister, repeated warnings that Greece would not receive any more aid unless it kept promises it had made to the International Monetary Fund, the European Commission and the European Central Bank to cut government spending and improve the economy.

“The payments on Greece are contingent on clear conditions,” Mr. Schäuble told the newspaper Bild am Sonntag.

As the largest country in the euro area, which has 17 European Union members, Germany is the biggest contributor to a bailout fund meant to help Greece as well as Portugal and Ireland continue to pay their debts while their economies recover.

Voters in Berlin, at least, did not punish Chancellor Angela Merkel for her handling of the debt crisis. Her Christian Democratic Union gained two percentage points in regional elections on Sunday compared with the last election five years ago, winning 23.4 percent of the vote. The Social Democrats, who have generally been supportive of aid to Greece, remained in power with 28.3 percent.

Support for the Free Democrats, whose leaders have been among the most vocal critics of Greek aid, plunged to 1.8 percent from 7.6 percent in 2006. That is below the 5 percent needed to seat representatives in the state Parliament.

The European Central Bank will also play a role in the decision of whether to continue aid to Greece, and has a strong interest in preventing a Greek default.

The central bank has spent an estimated 40 billion to 50 billion euros buying Greek bonds in an ultimately unsuccessful attempt to hold down the yield, or effective interest rate. It might need to rebuild its capital if those bonds default and will do all it can to dissuade political leaders from allowing Greece to fail.

In the end, when political leaders do the math, they may realize it is cheaper to save Greece than engineer a bank rescue only two years after the last round of bank bailouts, analysts said.

“There is no political advocacy for such a prospect in Greece or in Europe as it would signal the beginning of the unraveling of the euro zone,” said George Pagoulatos, a professor at the Athens University of Economics and Business. “The markets would start attacking Portugal and Ireland, and the domino would stop somewhere around France.”

Jack Ewing reported from Frankfurt, and Niki Kitsantonis from Athens. Stephen Castle contributed from Wroclaw, Poland.

Article source: http://feeds.nytimes.com/click.phdo?i=cee775fb6ce825a014a558f9f85c32e6

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Two-Day Strike in Greece Ahead of Austerity Vote

June 28, 2011 by Leave a Comment

The strike, organized by the country’s two main labor unions, is the latest in a series of walkouts and the longest strike in more than 30 years, as public outrage has grown over the Socialist government’s relentless austerity drive.

As the strike began, Olli Rehn, the European Union’s top economic and monetary affairs official, urged the Greek Parliament to approve the measures in votes expected on Wednesday and Thursday, so that its foreign lenders could release the aid Greece needs to stave off default.

“The only way to avoid immediate default is for Parliament to endorse the revised economic program,” Mr. Rehn said. “Let me say this clearly: There is no Plan B to avoid default.”

Parliamentary debate on the measures began Monday evening ahead of the vote, one of the most important in recent Greek history. Greece’s euro-zone partners — and, indeed, governments and investors around the world — are keenly watching the proceedings out of fear that a failure to straighten out the country’s financial problems could have repercussions throughout the world financial system.

As recently as last week, it appeared as if the Socialist prime minister, George A. Papandreou, would manage to push the measures through Parliament, where he has a narrow five-vote majority. That was true even after the center-right New Democracy opposition party announced that it would vote against them, saying the measures involved too much austerity and not enough stimulus spending.

But in recent days, a series of dissenters within the Socialist Party and a growing feeling that this government may be short-lived have complicated the picture.

So has the general strike — the first time Greek unions had walked out for more than 24 hours since democracy was restored in 1974.

The strike was aimed at halting all public transportation for two days except the Athens subway, which was running to allow Greeks to attend the demonstrations.

The strike also hit the tourism sector, as air traffic controllers called two work stoppages on Tuesday morning and from 6 p.m. to 10 p.m. on Wednesday. At the country’s main port of Piraeus protesting dockworkers formed a blockade on Tuesday morning, leaving tourists unable to board ferries to the Aegean islands.

After a peaceful start, in which thousands of demonstrators converged without incident on Syntagma Square in front of Parliament in the early afternoon the situation changed suddenly, with groups of youths on the fringes of a rally throwing rocks, firebombs and firecrackers.

Security forces fired multiple rounds of tear gas to thin out the crowds, sending the youths and other demonstrators fleeing into side streets. A police spokesman said it was too early to estimate the size of the demonstration and had no information about injuries.

In the city center, hundreds of police officers in riot gear were mobilized to avert violence of the kind that broke out during the last strike on June 15 and to protect the entrance to Parliament.

Tuesday’s demonstration was one of the first I which labor unions joined with the younger demonstrators who have been gathering in downtown Athens every night for the past month and who have less clear party affiliations.

As she stood in the square near the other so-called “indignados,” or “indignant ones,” named after the Spanish youth who protested in Madrid earlier this spring, Kyriaki Kokkini, 23, a psychology student, said she had mixed feelings about the unions. “On the one hand, we oppose all political parties, but at the same time we need the unions because they’re full of people whose participation we need.”

Stephen Castle contributed reporting from Brussels.

Article source: http://www.nytimes.com/2011/06/29/world/europe/29greece.html?partner=rss&emc=rss

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Greek Leader and ECB Reject Debt Restructuring

May 22, 2011 by Leave a Comment

Papandreou must present a fiscal plan next week that is credible enough for the European Union and the International Monetary Fund to continue bankrolling his debt-laden country.

But a large majority of Greeks reject more austerity, according to a poll published on Saturday, which also shows the ruling socialists losing their lead versus the conservative opposition for the first time since their 2009 election victory.

“Debt restructuring is not under discussion,” Papandreou said in an interview in Sunday newspaper Ethnos.

One year into its EU/IMF 110-billion euro bailout, Greece is struggling with weak revenues and deep recession, fuelling speculation that it will have to restructure its debt to pull itself out of the fiscal mess that triggered a euro zone crisis.

The chairman of the 17-country Eurogroup Jean-Claude Juncker said on Tuesday Greece may have to move towards a “soft restructuring” of its debt.

But the European Central Bank remains strongly opposed to such a move, due to fears that it would destabilise the euro.

Greece has no other option but to follow through its fiscal plan, ECB governing council member Ewald Nowotny told Greek newspaper To Vima on Saturday. “For the ECB, the line is one and clear: you have to implement the commitments you have made.”

In a separate interview in newspaper Kathimerini, ECB executive board member Juergen Stark said any kind of debt restructuring would thwart the country’s return to bond markets and undermine reforms. “We are at a critical juncture, what it really takes now is action,” Stark said.

On Friday, Fitch became the second major ratings agency to warn that it would consider any kind of debt restructuring as a sovereign default — exactly the kind of outcome euro zone governments are trying to avoid.

Asked by Ethnos if he would consider a debt “reprofiling” rather than a restructuring, Papandreou said: “We are looking after our job… We do not join the public discussion about such scenarios.”

LIMITS OF AUSTERITY, PRIVATISATIONS

Greece is considering deeper cuts in public sector wages and further tax increases on a range of products and professions to qualify for more aid, Greek newspapers said on Saturday.

The plan may include scrapping bonuses to civil servants and employees in state-run companies, newspapers Ta Nea and Isotimia reported, without citing any sources.

The government may also lower or scrap tax-free thresholds on property holdings and the self-employed, raise consumption taxes on soft drinks and certain fuel types or shift a range of products to a higher VAT-bracket, other newspapers said.

Papandreou vowed on Saturday to take any measure necessary to secure more funding for his country. “Greece must convince everyone of its determination,” he said.

But a large majority of Greeks say they cannot take more austerity as the country enters its third year of recession.

Eighty percent of respondents told pollster MRB they refused to make any further sacrifices to get more EU/IMF aid, an MRB poll for paper Realnews showed.

The same poll shows Papandreou’s ruling Socialist PASOK neck-and-neck with the opposition conservatives, with both parties scoring 21.5 percent each. In the previous MRB poll in April, PASOK had an 1.8 point-lead.

But Papandreou warned that any failure to push through the plan might lead the country straight to default. “At the moment, it does not seem as if Greece can cover its 2012 borrowing needs… from the market,” he said in the interview.

Papandreou pledged to speed up a 50 billion euro privatisation programme, a key part of efforts to shore up finances without a debt restructuring. However, he reiterated that the state would keep stakes in firms managing vital public goods and services, such as water and electricity utilities.

In an interview with German magazine Der Spiegel, Juncker urged Greece to set up a trustee institution to help privatise state assets, similar to the body that privatised East German companies after the fall of communism.

“Henceforth, the European Union will escort Greece’s privatisation programme as if we were conducting it ourselves,” he said.

(Editing by Philippa Fletcher)

Article source: http://www.nytimes.com/reuters/2011/05/21/business/business-us-greece-press-measures.html?partner=rss&emc=rss

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