Greek bailout: Protests as MPs consider new laws

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.

Analysis

The Government has breathed a great sigh of relief that it has secured a deal needed to avoid bankruptcy next month.

But for the public, the mood is hardening and is pretty much as bleak as the weather in Athens.

Parliament will be examining emergency legislation, part of the 3.3bn euros worth of savings that the government needs to get the bailout.

But the big unions and the communists have called for major protests.

"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.

George Papandreou speaking on BBC Hardtalk: ''We will not default and we will not exit the euro''

"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.

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?

Crowds
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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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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