Europe

Greek bailout: Protests as MPs consider new laws

  • 22 February 2012
  • From the section Europe
Protesters outside the Greek parliament in Athens (22 FEb 2012)
Greece has recently seen the worst rioting in years

Protests have taken place outside parliament in Greece, as MPs considered emergency laws after a 130bn-euro (£110bn; $170bn) bailout deal.

Rallies were called by the two main unions but the turnout was lower than expected because of the damp weather.

Parliament has a week to approve 3.3bn euros in spending cuts tied to the EU/IMF deal.

In a separate development, credit agency Fitch further downgraded Greece's rating from CCC to C.

Although no vote is expected in parliament until Thursday, key parts of the EU/IMF bailout will be discussed at committee level, including the debt writedown by holders of Greek bonds known as the private sector involvement (PSI).

Another measure being debated is a health bill that would further slash state spending, reports say.

A week ago, Athens saw its worst rioting in years, as MPs passed a series of deeply unpopular austerity measures.

"We're in a constant battle, a constant effort," Ilias Iliopoulos, general secretary of the ADEDY union said. "We will insist: overturn this policy. We are not bound by any of these agreements."

Under Tuesday's agreement, hammered out after marathon talks in Brussels:

  • Greece will undertake to reduce its debt from 160% of GDP to 120.5% by 2020
  • private holders of Greek debt will take losses of 53.5% on the value of their bonds, with the real loss as much as 70%
  • eurozone experts will permanently monitor Greece's economic management
  • a constitutional change will give priority to debt repayments over the funding of government services

Fitch's decision to downgrade Greece's credit rating still further was a direct result of the bond swap agreement, under which private creditors will sustain enforced losses.

"The exchange, if completed, would constitute a 'distressed debt exchange'," Fitch said in a statement.

Greek Prime Minister Lucas Papademos told President Karolos Papoulias that the outcome of the negotiations in Brussels had been "extremely satisfactory".

Before private talks on Wednesday, he told the president in remarks broadcast by Greek television that "the decisions taken in Brussels and those that remain to be taken in Athens, will create the conditions for growth and the recovery of the Greek economy".

Opinion polls suggest that the two parties in the coalition government, which currently dominate parliament, are facing huge losses at the next election, scheduled for April.

Parties on the far left and far right, which are set to make big gains, are opposed to the bailout deal.

The head of the opposition Communist party has vowed to oppose new cuts.

"We insist on daily struggle to thwart the measures and this struggle cannot be a defensive one," said Aleka Papariga.

Eurozone leaders hailed the deal as a triumph, and said it had saved Greece from going bankrupt.

Former Greek Prime Minister George Papandreou told the BBC's Hardtalk programme that Greece deserved more respect from international analysts and financial markets.

"We have made major sacrifices in Greece," he said.

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