Greece bailout: PM Lucas Papademos gives final warning

PM Lucas Papademos in TV address - 11 February Mr Papademos said the measures would enable Greece to stay in the euro

The Greek PM has warned the nation of a collapse in living standards if MPs fail to pass an unpopular austerity bill demanded in return for a 130bn-euro ($170bn; £110bn) bailout.

In a TV address, Lucas Papademos said Greece was "just a breath away from Ground Zero".

The cabinet has approved the measures but five government ministers resigned.

Unions are holding a 48-hour strike, and thousands of protesters rallied in central Athens against the measures.

Riot police were on standby after clashes on Friday, but the demonstrations were mostly peaceful.

The austerity measures are being demanded by the eurozone and IMF - they must now be passed by the Greek parliament and approved by European finance ministers.

Some MPs from the governing parties are expected to vote against the bill, the BBC's Mark Lowen in Athens reports.

But analysts say the package should still have enough support in parliament, because Pasok, the largest party, and its coalition ally New Democracy account for more than 230 deputies out of a total of 300.

Catastrophe fear

Mr Papademos said the measures would "decide the country's future" and enable it to stay inside the euro.

Athens and EU flag What went wrong in Greece?

What went wrong in Greece?

An old drachma note and a euro note
Greece's economic reforms, which led to it abandoning the drachma as its currency in favour of the euro in 2002, made it easier for the country to borrow money.

What went wrong in Greece?

The opening ceremony at the Athens Olympics
Greece went on a big, debt-funded spending spree, including paying for high-profile projects such as the 2004 Athens Olympics, which went well over its budget.

What went wrong in Greece?

A defunct restaurant for sale in central Athens
The country was hit by the downturn, which meant it had to spend more on benefits and received less in taxes. There were also doubts about the accuracy of its economic statistics.

What went wrong in Greece?

A man with a bag of coins walks past the headquarters of the Bank of Greece
Greece's economic problems meant lenders started charging higher interest rates to lend it money. Widespread tax evasion also hit the government's coffers.

What went wrong in Greece?

Workers in a rally led by the PAME union in Athens on 22 April 2010
There have been demonstrations against the government's austerity measures to deal with its debt, such as cuts to public sector pay and pensions, reduced benefits and increased taxes.

What went wrong in Greece?

Greece's problems have made investors nervous, which has made it more expensive for other European countries such as Portugal to borrow money.
Eurozone leaders are worried that if Greece were to default, and even leave the euro, it would cause a major financial crisis that could spread to much bigger economies such as Italy and Spain.

What went wrong in Greece?

Greek Prime Minister George Papandreou at an EU summit in Brussels on 26 March 2010
In 2010, the EU, IMF and ECB agreed a bailout worth 110bn euros (£92bn; $145bn) for Greece. Prime Minister George Papandreou quit the following year while negotiating its follow-up.

What went wrong in Greece?

Lucas Papademos
Lucas Papademos, who succeeded Mr Papandreou, has negotiated a second bailout of 130bn euros, plus a debt writedown of 107bn euros. The price: increased austerity and eurozone monitoring.

What went wrong in Greece?

In May 2012 elections a majority of voters backed parties opposed to austerity, but no group won an overall majority resulting in political deadlock. Fresh elections have been called in June.
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"The social cost of this programme is limited in comparison with the economic and social catastrophe that would follow if we didn't adopt it," he said.

Savings would be lost, the government would be unable to pay wages or salaries, and imports of fuel, medicine and machinery would be disrupted, he added.

Earlier, Greek conservative leader Antonis Samaras said all his party's MPs must vote in favour of the bailout law.

Mr Samaras, whose New Democracy party is a member of the governing coalition, said any rebels would face being dropped as parliamentary candidates.

Deputy Foreign Minister Mariliza Xenogiannakopoulou, who quit on Friday afternoon, is the most senior defection so far.

Her Pasok party, the largest in the coalition, also suffered the loss of a deputy labour minister on Thursday.

The austerity cuts include:

  • 15,000 public-sector job cuts
  • liberalisation of labour laws
  • lowering the minimum wage by 20% from 751 euros a month to 600 euros
  • negotiating a debt write-off with banks.

These were presented to a eurozone ministers in Brussels on Thursday evening.

But they want a further 325m euros in savings for this year and also insist that Greek leaders give "strong political assurances" on the implementation of the packages.


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  • rate this

    Comment number 133.

    Merkel and Sarkozy are making sure that the German and French economies continue to thrive. But the Greek people will suffer with lower living standards for years.

    This will lead to resentment, unrest and riots. Then it will be Portugals turn, then Spain maybe even Italy. What a mess.

    The Euro is domed.

  • rate this

    Comment number 125.

    If I were a Greek I must admit I'd be very worried.. However looking from the outside I think their best option is to default. The pain will largely be felt in other EU countries, hence the pressure on them not to do so...

    Go back to the Drachma, focus on tourism (which is currently too expensive there due to the Euro) be realistic, and rebuild your future.

    I wish them the very best of luck...

  • rate this

    Comment number 62.

    The Euro is NOT flawed. It is the self-serving attitude of the politicians that is flawed. Before this crises, the Euro was starting to challenge the US dollar for supremacy. The PIIGS are the countries that are flawed. Not the Euro. If Greece, Spain and Portugal want to continue with their lazy work ethics then I do hope they continue outside of 'Europe'.

  • rate this

    Comment number 58.

    The Greek government should hold a referendum before they commit their people to decades of austerity controlled by the EU and the IMF.

  • rate this

    Comment number 35.

    No wonderthe Greeks are rioting and striking, over the last few years prices have risen to a point where there is not much difference between their food prices and ours yet the minimum wage is to be 150 euro a week, that is nothing but slavery - how are the poor supposed to live?? It is time imo for the Greeks to bite the bullet and get out of the Euro and reinstate their own currency


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