Greece braces for shutdown as austerity vote nears 18 Oct 11

A policeman holds a Greek flag during an anti-austerity rally in front of the Panathenean stadium in Athens October 17, 2011.

By Harry Papachristou and James Mackenzie

ATHENS | Tue Oct 18, 2011 7:18am EDT

(Reuters) – Greek ships were harbored and garbage rotted in the streets of Athens on Tuesday as angry workers built momentum for “the mother of all strikes” expected to bring the country to a halt in protest against a new package of tax hikes and wage cuts.

Unions representing around half of Greece’s 4 million-strong workforce have called a 48 hour general strike for Wednesday and Thursday to protest against a sweeping package of austerity measures due to be passed in parliament this week.

A wave of smaller strikes over recent days by groups ranging from rubbish collectors to tax officials, journalists and seamen has given a foretaste of this week’s protest which will culminate in mass demonstrations in front of parliament, the scene of violent clashes in June.

The protest, dubbed “the mother of all strikes” by the daily Ta Nea newspaper, is expected to be the biggest since the financial crisis began two years ago, shutting state offices, shops and even providers of everyday staples like bakers.

Prime Minister George Papandreou, battling to satisfy demands from international lenders for even tougher action, has appealed for unity, saying the package, due to be passed on Wednesday or Thursday, must pass to allow Greece to emerge from the crisis.

“The nation is at a crucial moment and we have to be united. In this battle, we need everyone,” Papandreou told a cabinet meeting late on Monday. “Everyone must assume their responsibilities.”

“Our main goal is to end the uncertainty over the country’s future. Because this uncertainty undermines our efforts and sacrifices,” he said.

His struggling Socialist government, trailing badly in the opinion polls, is being squeezed between the escalating street protests and pressure from lenders dissatisfied with the pace of reform.

As European Union leaders race to put the foundations of a new rescue plan in place in time for a summit on October 23, there was growing talk of more direct intervention that would restrict Greek sovereignty in return for more aid.

Some euro zone countries have been pressing for a European Commission taskforce to be given direct powers to intervene in areas such as overseeing the sale of state assets.

The Greek government declined to comment on Tuesday but any outside taskforce would need to be ready to counter resistance from a society deeply disillusioned with its own political leaders but also increasingly hostile to outside intervention.

RECESSION

Late on Monday, Papandreou suffered a blow when PASOK deputy Thomas Robopoulos resigned in protest at the cuts, although parliamentary rules allow him to be replaced by another member of the ruling party, leaving the government’s 4-seat majority intact.

Two other PASOK deputies have also threatened to vote against part of the package but, with one of the smaller opposition parties possibly offering support, the package is still expected to pass.

The bill includes tax hikes, wage cuts, public sector layoffs and changes to collective bargaining rules.

It follows a series of painful austerity measures that have so far failed to halt a steady rise in Greece’s mountainous public debt and have been attacked by the opposition for stifling any prospect of growth in the stricken economy.

Trapped in deep recession for the past three years, Greece is choking on a public debt that amounts to around 162 percent of gross domestic product and there are growing doubts that it will be able to emerge from the crisis without defaulting.

Underlining the problems facing an economy that is already forecast to contract 5.5 percent in 2011, data on Tuesday showed headline unemployment rising to 16.5 percent in July, a month when summer tourism normally boosts job numbers. Youth unemployment was running as high as 42 percent.

An EU and IMF inspection team left Athens last week, recommending approval of a vital 8 billion euro loan tranche but said Greece was falling behind on its budget targets and should move more quickly to cut spending and pass reforms.

Parliament is due to open a three-day debate later on Tuesday, after Papandreou meets members of the ruling PASOK parliamentary group to rally support.

He wants convincing backing for the measures in time for the EU summit and is due to meet conservative opposition leader Antonis Samaras in a bid to present a united front in Brussels.

However government officials have dismissed rumors that Papandreou might renew an offer for a coalition government, which Samaras turned down in the summer.