Greek PM to reshuffle government to push austerity plan

 

 

Greek Prime Minister George Papandreou plans to form a new cabinet on Thursday and seek a vote of confidence from his fractious Socialist party to try to push through an austerity package and avoid default.

Papandreou must pass the new 5-year campaign of tax rises, spending cuts and sell-offs of state property to receive a new EU/IMF bailout and a 12 billion euro aid tranche that Athens needs to pay back debt that matures in August.

Papandreou may seek to replace his finance minister, George Papaconstantinou, the main architect of hugely unpopular budget cuts demanded by the EU and the IMF as part of Greece's 110 billion euro bailout last year.

The reshuffle underscores the tenuous political and popular support for the new deal, but analysts say Greece has no choice but to carry on with the austerity measures or face default.

"If Papandreou gets the vote of confidence we will not go to elections and the chances that the mid-term plan passes will increase," Theodore Couloumbis of the ELIAMEP think tank said.

Nonetheless, world stocks and the euro slumped late on Wednesday as the upheaval fed fears of a default.

Papandreou had initially offered to step down and form a unity government with opposition parties, but he abandoned the idea after the conservative New Democracy demanded Athens renegotiate its year-old international bailout.

New Democracy leader Antonis Samaras said the only way out of the crisis was early elections, but analysts said that would only happen in the unlikely event that the government failed to get a vote of confidence.

Political observers also said the reshuffle could persuade rebellious backbenchers in his PASOK party to back the measures despite widespread public anger.

"It's rare that deputies of a ruling party vote in favor of getting out of parliament," Couloumbis said.

Former ECB Vice-President Lucas Papademos is most frequently cited as a candidate to replace Papaconstantinou, who local media have said may be on his way to the Foreign Ministry.

But ALCO's Panagopoulos added that the prime minister may have a hard time convincing people outside the political arena to join his embattled government, which faced mass protests on Wednesday over the prospect of yet another squeeze.

TEARGAS

The new austerity package foresees 6.5 billion euros ($9.4 billion) in tax rises and spending cuts this year, doubling the effect of measures agreed with bailout lenders that have jacked unemployment up to a record 16.2 percent and extended a deep recession into its third year.

The plan includes new luxury taxes, a crackdown on tax evasion and tax rises on soft drinks, swimming pools, restaurant bills and real estate. The euro zone member's 750,000-strong public work force would be cut by a fifth. It also aims to raise 50 billion euros by selling off state-owned firms.

Thousands of activists and unionists converged on Athens's central Syntagma square on the parliament's front steps on Wednesday to try to stop lawmakers from debating the measures in committee that they hope to pass by the end of the month.

Stun grenades boomed around the square and plumes of smoke rose from burning garbage bins as police fired teargas and fought running skirmishes with scores of youths who fought back with rocks and long clubs.

"We want them out. Obviously these measures are not going to get us out of the crisis," Antony Vatselas, a 28-year-old mechanical engineer, crying from teargas. "They want only us to pay for it. And they are doing nothing. I want the debt to be erased. If this doesn't happen, there is no exit for Greece."

One group hurled petrol bombs and clashed with police at buildings housing the Finance Ministry, also on the square. Reuters witnesses saw flames in front of an entrance to the main building and a similar clash a few buildings down.

The vast majority of the crowd -- which included union workers, political party members, pensioners, and a wide array of Greeks upset at the new austerity measures -- only shouted at the parliament building and remained peaceful.

"Thieves, traitors!" many chanted. "Where did the money go?"

About 1,500 police closed a large part of the city center and created a corridor to hold back protesters as lawmakers drove up to the building in official limousines.

The Health Ministry said 33 people were injured. Fifteen people were arrested, police said. Police officials said the crowd reached around 30,000 but they often underestimate numbers. 

 

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Greeks rage against austerity while EU argues

Striking Greeks raged against a new wave of austerity on Wednesday after euro zone finance ministers failed to agree how to make private creditors contribute to a second bailout for their indebted country.

As workers staged a national strike, thousands of protesters -- some chanting "Thieves, traitors! Where did the money go" -- massed at parliament to try to prevent lawmakers enacting more tax hikes, spending cuts and sell-offs of state property.

Socialist Prime Minister George Papandreou must push through a five-year deficit reduction and privatisation programme to continue receiving aid from the European Union and International Monetary Fund and avoid default after Greece fell behind on its first 110 billion euros (97.0 billion pounds) rescue plan.

In Brussels, finance ministers of the 17-nation single currency area debated late into the night how to make private bondholders share the cost of the second rescue in two years without triggering even worse turmoil in financial markets.

They are aiming for a deal at a European Union summit on June 23-24 and will meet again on Sunday evening in Luxembourg. However Tuesday's apparent impasse, and the absence of the usual news conference, sent the cost of insuring Greek debt against default rocketing to an all-time high.

Highlighting contagion risks from the Greek crisis, shares in top French banks tumbled after credit ratings agency Moody's said it might downgrade them because of their exposure to Greece's debt-stricken economy.

Greek bank stocks also fell by as much as 7 percent on growing political uncertainty.

The French government sought to deflect market pressure by noting -- perhaps pointedly in the light of differences between Paris and Berlin over the Greek bailout -- that German banks were actually more exposed.

"French banks are exposed to Greece... (but) they are less exposed than the German banking sector, for instance," Secretary of State for European Affairs Laurent Wauquiez said.

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UN summit sets plan to stop HIV child infections

World leaders at a U.N. AIDS summit launched a plan on Thursday to try to eliminate by 2015 most new HIV infections among children, who inherit the condition from already infected mothers.
The campaign was launched as the leaders also agreed on a target of reaching 15 million people with HIV treatment, more than double the number who currently get it, also by 2015.
Both goals were announced just weeks after groundbreaking new data showed that early treatment of the human immunodeficiency virus, or HIV, which causes AIDS, can cut its transmission to a sexual partner by 96 percent.
In 2009, some 370,000 children were born with HIV, or one nearly every minute -- the vast majority of them in 22 countries, almost all in Africa. But providing HIV-positive pregnant women with treatment can reduce the risk of a child being born with the virus to less than 5 percent.
The UNAIDS organization and the U.S. President's Emergency Plan for AIDS Relief (PEPFAR), which are jointly managing the campaign launched on Thursday, said it would aim to reduce the number of child infections by 90 percent by 2015.
"We believe that by 2015 children everywhere can be born free of HIV and that their mothers can remain healthy," UNAIDS Executive Director Michel Sidibe told the launch event, describing the plan as realistic and achievable.
UNAIDS Deputy Executive Director Paul De Lay told Reuters the plan was based on providing pregnant women with more information and on more effective use of anti-AIDS drugs.
"BEGINNING OF THE END"
UNAIDS officials said funding from all sources for prevention of mother-child transmission of HIV was currently running at some $500 million a year. They said a total of $2.5 billion more would be needed by 2015 to achieve the campaign's target of eliminating mother-to-child HIV infections.
"Developed countries already do this," U.N. Secretary-General Ban Ki-moon told the meeting. "But we cannot rest until this is true for our whole world."
U.S. Global AIDS Coordinator Eric Goosby said the United States was contributing an extra $75 million to the campaign. Several private companies and foundations also announced contributions.
Achieving the goal could be "the beginning of the end of the story, because that opens the prospect for an AIDS-free generation," Michel Kazatchkine, head of the Global Fund to Fight AIDS, Tuberculosis and Malaria, told Reuters.
Meanwhile, a declaration agreed by the 140-nation U.N. summit commits governments to "the target of working toward 15 million people living with HIV on antiretroviral treatment by 2015."
The declaration is expected to be adopted on Friday at the end of the three-day summit, which was held close to the 30th anniversary of the discovery of AIDS.
Some 6.6 million were receiving antiretroviral treatment in low- and middle-income countries at the end of 2010, according to U.N. figures.
Aid group Medecins Sans Frontieres (MSF) called the pledge a "critical step," but said governments needed to take "immediate concrete action" to make the target a reality.
"There are 9 million people waiting for HIV treatment today," Tido von Schoen-Angerer of MSF said in a statement. "This whole AIDS summit will have been a farce if we don't see real plans to ramp up treatment so we can get ahead of the wave of new infections."

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Greek PM rebuffs austerity opponents, vows June vote

Protesters shout slogans and lift a Greek flag during a rally against austerity economic measures and corruption in Athens' Constitution square, June 9, 2011.

Credit: Reuters/Pascal Rossignol

The Greek government defended its new austerity package from attacks in parliament on Friday, saying it was the only way to stave off bankruptcy, and made a new call for opposition parties to back the plan. Prime Minister George Papandreou's plan almost doubles the belt-tightening measures for 2011 already agreed with the International Monetary Fund and the European Union, after the lenders judged that Athens had missed goals outlined under its bailout.
The ruling Socialist party has 156 deputies in the 300-seat house but growing numbers of its members are expressing unease at proposals including cutting spending and raising taxes to reduce the deficit by 6.5 billion euros more this year than first planned.
Papandreou is anxious to pass the plan for more austerity through 2015 despite strikes, mass street protests and dissident voices within his own ruling Socialist party.
"The medicine is not pleasant and the treatment requires devotion and commitment," he told parliament.
"No prime minister of any country wants to go out with a beggar's tray and collect money from other countries ... I certainly don't, but I do it for Greece."
Papandreou is fighting to get not only opposition parties but also his reluctant PASOK party behind the strategy, a condition for receiving more aid from international lenders who threw Greece a 110 billion euro ($160 billion) emergency funding lifeline last year.

PROTESTS AT PARLIAMENT

According to a weekly schedule released by parliament, lawmakers will start debating the midterm plan in the chamber's economic affairs committee on Wednesday.
That will coincide with a nationwide strike by labor unions expected to draw tens of thousands of demonstrators to Syntagma square, parliament's front stoop and the site of two weeks of nightly grassroots protests.
The square is also the convergence point of daily marches by staff in firms earmarked for privatization who oppose the government's pledge to raise 50 billion euros in the selloff of state-owned companies by 2015.
In a televised address to the nation, Papandreou invited proposals for the plan from opposition parties and called for cooperation to improve Athens' position in talks with Brussels ahead of a June 23-24 EU summit.
"I call on the leadership of all parties to cooperate," he said in a televised announcement. "There are many and important points where we converge. With a national consensus, we can negotiate jointly with our partners."
In a move aimed at reducing resistance by the main opposition New Democracy party to the measures, Finance Minister George Papaconstantinou said the government was considering submitting a new tax bill in September cutting VAT and corporate taxes and said he hoped parliament would approve the mid-term plan by the end of June.
The IMF and EU have demanded wider political consensus in Greece before they give the debt-ridden euro zone member more cash. But the main opposition groups have vowed to vote against the new measures, saying they are choking economic growth.
"The mid-term plan is unreliable, unjust and ineffective. It is a de facto confession of the failure of the bailout," New Democracy party spokesman Yannis Michelakis said in a statement.
European officials are still trying to work out a plan which hits private investors for some of the cost of the new funding plan, expected to be worth around an additional 120 billion euros including 30 billion from sales of Greek state assets.
Figures on Thursday showed the economy is in worse shape than initially feared, with gross domestic product tumbling 5.5 percent year-on-year in the first quarter.

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Start of Afghan transition on track for July: NATO

Plans are on track for Afghan forces to take charge of security in seven areas of Afghanistan from late July with a second phase of the handover starting in December, NATO commanders said on Thursday. Major-General Tim Evans, a senior British officer with the NATO-led International Security Assistance Force (ISAF), on a video link from Afghanistan, said the first set of areas would start transferring from ISAF to Afghan control on July 20. Afghan President Hamid Karzai said in March that seven areas would be included in the initial phase of transition, the first step in a long process due to end with the withdrawal of all foreign combat troops from Afghanistan by 2014. Karzai has said the transition would begin in the Afghan month of Saratan, which runs from June 22 to July 22 on the Western calendar, but has not given an exact date. Lieutenant-General David Rodriguez, the second most senior US commander in Afghanistan, speaking on the same video conference with reporters, said the Afghan government was "walking through all the plans and preparations now" for the first phase of transition. Afghan authorities had begun "face-to-face meetings down at the local level" in preparation for the handover and were very satisfied with ISAF's plans to support the transition, he said. "They are already looking forward to the next group (of areas for transition) that will be announced in the fall and initiate the process in December," said Rodriguez, commander of day-to-day operations for the 150,000-strong NATO-led force. TROOP DRAWDOWN The move is part of NATO's strategy to hand over responsibility to an expanding Afghan force gradually, allowing reductions in foreign forces currently battling Taliban insurgents. President Barack Obama is expected to announce soon he will bring home a sizable number of the 100,000 US troops in Afghanistan starting in July. The relatively peaceful provinces of Bamiyan and Panjshir, the western city of Herat, areas around the capital Kabul and part of eastern Laghman province are among the first areas to be handed over. Also on the transition list are Mazar-i-Sharif in the north and Lashkar Gah, capital of volatile southern Helmand province. Evans said the transition did not mean that all British troops in Lashkar Gah would suddenly leave in July. "We've got to make sure we still support the Afghan forces," he said. But if conditions allowed, troops from areas that had been handed over would be moved to help other areas progress toward transition, he said. Evans also said that the level of violence during this year's "fighting season" was likely to be "as high if not higher than last year" because ISAF forces were pursuing insurgents. NATO had anticipated that the insurgents might concentrate on areas singled out for transition to Afghan control, he said. Osama bin Laden's killing in a US raid in Pakistan last month has fueled calls in the United States for a faster drawdown of troops. Rodriguez said the al Qaeda leader's death had so far had no discernible effect on the ground, although he hoped bin Laden's influence on the Taliban would now decline.

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