ATHENS (MNI) – Greece is now in the final hours before a critical
vote on austerity and privatization measures that could determine
whether Athens will be able to honor repayment obligations falling due
the middle of next month.
The Greek Parliament will vote this afternoon on a package of
measures that includes E28 billion in spending cuts and tax hikes and
the creation of an independent privatization agency that will be charged
with the task of raising at least E50 billion by selling off publicly
owned assets.
The voting is scheduled to begin at 1100 GMT/0700 EDT, though the
time is not written in stone.
As Greece counts down and financial markets wait in suspense,
protests on the streets of Athens are continuing Wednesday morning, with
new reports of violent confrontations between demonstrators and police.
Numerous Eurozone officials have issued dire warnings to Greece in
recent days, predicting that if Parliament rejects the measures, the
country will quickly default on its debt, leading to deeper chaos
domestically and contagion to other countries of the Eurozone.
“For parliament to vote against this package would be a crime —
the country would be voting for its suicide,” Greece’s central bank
Governor George Provopoulos warned in an interview with the Financial
Times published on its website late Tuesday.
The European Commission, the International Monetary Fund and the
European Central Bank — the so-called “troika” — have all said that
passage of the measures is an absolute condition for Greece to receive a
E12 billion loan tranche from its current EMU-IMF bailout plan. Without
that money, Greece would not be able to pay off bonds maturing in July
and would be in default.
With the money, Greece would stay afloat financially until
September, when the next tranche is due. European officials, along with
private creditor banks, are in talks for a second bailout package, for
an estimated E100 to E120 billion, which they hope will be in place
before September. EMU finance ministers are expected to sketch out at
least the broad outlines of the plan at meetings on July 3 and 11.
The ruling Socialist (PASOK) party of Prime Minister George
Papandreou has a modest majority of 155 seats in the 300-seat
parliament. The number of votes required for passage is 151. In theory,
that means the government should be able to secure approval of the
measures, and indeed that is the most likely scenario.
However, some PASOK members with close ties to trade unions that
have been protesting the measures have indicated recently that their
support is not guaranteed. The government has been putting intense
pressure on them to fall into line in the face of this “austerity or
default” dilemma. The opposition parties have vowed to oppose the
measures, but some opposition MPs have suggested they might support the
package if their votes are needed.
On Tuesday, government spokesman Ilias Mosialos expressed
confidence that the government plan would carry the day.
Today’s vote is actually only the first in a two-step process. On
Thursday, Parliament must vote again on a so-called “enforcement law,”
which is needed to actually ensure that the measures — if approved —
are implemented.
It is conceivable that the voting could yield a complicated
outcome: MPs might theoretically vote in favor of some of the measures,
such as privatization, for example, but against others, such as tax
hikes or spending cuts. This scenario becomes less likely, however, if
Papandreou manages to impose party discipline.
The package consists of three major components: spending cuts,
which include pay cuts and job reductions in the public sector; tax
hikes, which include increases on virtually all income categories; and
privatization, which is to be managed by an outside agency with strong
input from foreign experts.
In his Financial Times interview, Provopoulos complained that the
package puts too much emphasis on tax increases and not enough on
spending cuts. They are both extremely unpopular, as is the
privatization plan, and have brought tens of thousands of protesters —
and rioters — into the streets of Athens every day for the past month.
Meanwhile, there are new questions about the ability of Greece to
hit its E50 billion privatization target.
The FT, citing a new report, said Greece “will struggle” to sell
even a quarter of the E50 billion targeted, “unless it adds more prime
land and cultural heritage to its sales list” — a move that would raise
the temperature on the streets even further.
According to the report, by Milan-based Privatisation Barometer,
only slightly more than E13 billion of Greek assets are ready to sell —
E6.6 billion from stakes in 15 listed companies and E7 billion from the
sale of 70 unlisted companies, a figure that the report calls
“optimistic.”
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