Bloomberg News

Greek Police Fire Tear Gas as Strike Overshadows Budget Vote

June 28, 2011

(Updates with timing of debate and vote in second and sixth paragraphs. See EXT4 <GO> for more on Europe’s sovereign debt crisis).

June 28 (Bloomberg) -- Greek police fired tear gas to disperse protesters in the center of Athens as labor unions shut down government services before a vote on austerity measures that may determine if the nation can avoid a default.

Lawmakers debated Prime Minister George Papandreou’s five- year plan of budget cuts and asset sales for a second day before a vote tomorrow at 2 p.m. Athens time. A crowd estimated by police to number 20,000 thronged outside Parliament in protests that descended into violence as riot police fired tear gas in battles with hooded youths who smashed windows at a McDonald’s Corp restaurant and set two vans on fire.

“We are determined to stop this plan from passing and if it does pass, we will continue our efforts,” said Dimitra Oikonomou, 50, a schoolteacher who joined today’s rallies. “The government might not listen to us now, but in the end they will hear it all at once.”

The vote tomorrow will be Papandreou’s second survival test in a week and has to succeed for the cash-strapped nation to tap a fifth loan payment from last year’s 110 billion-euro ($157 billion) rescue. Failure to pass the government’s 78 billion- euro plan may lead to the euro area’s first sovereign default.

‘Chapter of Uncertainty’

“Voting for the medium-term plan means we can close this chapter of uncertainty for the Greek people,” Papandreou told lawmakers at the start of a three-day debate late yesterday. “From the brink of catastrophe we are securing, colleagues, the great opportunity to change our country.”

The final session of the three-day debate will begin at 9:30 a.m. tomorrow, Grigoris Niotis, the deputy speaker of the legislature, said in comments setting out the timetable that were televised live on state-run Vouli TV.

Papandreou’s Pasok party has 155 of the 300 seats in the legislature, and his ability to keep his lawmakers united in two votes this week on budget cuts and asset sales will be critical to his victory. Two of them have said they may vote against the legislation, in part due to their opposition to plans to sell a stake in Public Power Corp. SA.

One of the dissident lawmakers, Thomas Robopoulos, told Skai TV today that he was moved by Papandreou’s comments yesterday and that Greece faces critical times. He said he will decide on how to vote during the final debate tomorrow.

Support Hope

In a move that may help Papandreou secure approval in Parliament, the Democratic Alliance group of lawmakers, a party founded by former foreign minister Dora Bakoyannis, said its five lawmakers in Parliament should vote “according to their conscience” taking into account “the immediate danger of bankruptcy facing the country.”

Workers at the former electricity monopoly have held rolling 48-hour strikes for the eight days, leading to power cuts around the country.

State-asset sales are the “first pillar” in any new financing package for Greece and an important factor for its European Union and International Monetary Fund partners, who are supplying the aid, Finance Minister Evangelos Venizelos said in parliament today. He spoke as a debate on the second bill, the so-called Implementation Law, began under a fast-track process, to make a June 30 deadline.

Air Disruptions

Air traffic controllers are ceasing work for eight hours today and tomorrow, according to a statement on the union’s website. That has caused the cancellation of all flights into and out of the Athens International Airport, the country’s biggest, between 8 a.m. and midday and 6 p.m. and 10 p.m. today.

Aegean Airlines SA will reschedule 97 flights and cancel 26 today. Another 17 routes will be cut tomorrow and flight times for 82 domestic and international destinations changed. Olympic Air will cancel and reschedule 52 flights today.

Bus, trolley, and tram workers in Athens have joined the strike, as have staff at Hellenic Railways Organization, Greece’s state-run rail company. Dockworkers, journalists, health-care and municipal workers are also participating.

Protesters chanted slogans against the government as they marched. One banner read “Bankers are PIGS, not the people,” a reference to the acronym for countries in the EU that have sought aid.

Police deployed 3,000 officers to protect the Parliament building that is the focus of demonstrations. In the square below, they used tear gas to fight protesters throwing pieces of marble chipped with hammers from the sidewalk.

Riot Injuries

Thirty people were injured in today’s demonstrations, 21 of them police officers, according to information from the Greek police and the health ministry. Five people were arrested in the clashes.

The situation has calmed down now, police spokesman Takis Papapetropoulos said by telephone. The so-called Indignants, the group that has drawn crowds to Parliament for several weeks, has vowed not to leave and urged protesters to return for an evening rally, according to an e-mailed statement.

Workers at the capital city’s subway called off plans to strike, keeping the service open to allow protesters to participate in the rallies.

Papandreou, whose support has slid in opinion polls, has spent the past 15 days trying and failing to muster opposition backing for the package, while keeping his own party in line. He appointed a new finance minister to stem defections, survived a confidence vote and outlined 5.6 billion euros of additional budget measures.

Bailout Condition

On June 24, he won a pledge for a second bailout from EU leaders, on the condition that he delivers domestic support for the retrenchment.EU finance ministers meet on July 3 to approve the release of the 12 billion-euro tranche of aid.

Greek government officials say they may not have money past mid-July to pay wages and pensions. The country needs to cover 6.6 billion euros of maturing bonds in August.

Implementing more austerity measures threatens to deepen a three-year recession and complicate efforts to boost government revenue and has stoked discontent among Greeks.

The economy contracted 4.4 percent in 2010 and will shrink a further 3.8 percent this year, according to a report from EU and IMF inspectors in June. The nation’s debt load will peak at 166 percent of gross domestic product next year, and is already the biggest in the euro region’s history.

Papandreou’s plan includes higher taxes on restaurants and bars, higher heating-oil taxes and lowering the tax-free threshold to 8,000 euros from 12,000 euros presently. Greek newspaper To Vima calculated the additional burden for an average Greek family of four at 2,795 euros a year, about the same as one month’s income.

--With assistance from Maria Petrakis, Eleni Chrepa, Nicole Itano and Marcus Bensasson in Athens. Editors: Craig Stirling, Andrew Davis

To contact the reporters on this story: Tom Stoukas in Athens at astoukas@bloomberg.net; Natalie Weeks in Athens at nweeks2@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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