Pressure is growing on Prime Minister George Papandreou’s government, which is trying to muster support for a five-year plan that its international lenders say is crucial for them to extend more funding and enable Athens to avoid default. European Union leaders and the European Central Bank are also split over whether private bondholders should share the burden of a fresh bailout plan.
Papandreou’s Socialist party is due to submit its mid-term plan for discussion in parliament tomorrow, with the goal of passing it later this month. But protesters, that have been staging daily demonstrations outside of the Greek parliament said that they would encircle the building on Wednesday in order to block MPs from entering the parliament In order to vote. “Now that the government is putting the medium term austerity programme to vote, we (will) encircle the parliament, we (will) gather and we (will) stay at Syntagma,” the self-named People’s Assembly of Syntagma Square said in a statement. “Our first stop is the general strike of June 15th. We won’t stop until they withdraw it.”
Discontent for new credit rating
On Monday, credit ratings agency Standard & Poor’s made Greece the lowest-ranked country it covers and said it looked increasingly likely that Athens would restructure its 340 billion Euro debt load, a move it would see as a default. The news helped push Greek 10-year bond yields to a record high of 17.51 percent. Greece sold 1.625 billion euros of 6-month T-bills today, with the yield rising by 8 basis points compared to the previous auction, in May
EU Commissioner for economic and monetary affairs Olli Rehn told a German paper a solution was not as far off as some might think and talked about a possible deal in which banks holding Greek bonds are encouraged to buy more as their holdings mature. But ratings agencies have warned they would see such a move as default, and the ECB has rejected any type of private sector involvement in debt restructuring that is not completely voluntary by banks holding Greek bonds.
The EU and the IMF want all Greek parties to give their support for the package ahead of a June 20 meeting of EU finance ministers and a June 23-24 EU summit when leaders set to discuss a new plan worth 120 billion Euros to replace last year’s deal. The discussion and passage of the government’s mid-year austerity plan, are central to the release of a 12 billion Euro tranche that Greece needs to roll over debt. But the conservative opposition party New Democracy has refused to back the plan.
The downgrading decision by the Standard and Poor’s firm is taking place in the midst of strong rumours and statements (to which it also refers) by representatives of the EU and the ECB. It overlooks the intense consultations within the European Commission, the European Central Bank and the International Monetary Fund on the finding of a viable solution that permits the continuing financing of our country and the coverage of its borrowing needs in the coming years, said a statement by the Greek Finance Ministry in response to the new credit rating. “The decision also overlooks the government’s moves, so that whatever problems will be avoided in relation to the contractual obligations of Greece, as well as the will of all us Greeks to plan our future in the eurozone.
PASOK party in a shambles
In Crete, 29 Chania voters have sent a solicitor’s letter to three ruling PASOK MPs for their constituency, demanding that they do not vote for the Medium-Term Fiscal Strategy unveiled by the government, or they would be accountable to the people. “We expect those that we elect to the Greek Parliament to defend the interests of the Greek people and not the interests of bankers and big capital.” The letter was sent to PASOK MPs Sifis Valyrakis, Eftichis Damianakis and Evangelia Kouroupaki, with a copy also sent to MP Christos Markoyiannakis.
On the other, PASOK MP for Kozani Alekos Athanasiadis stated in a radio interview earlier today that he will vote against the government’s medium-term programme. “I will not vote for the medium-term programme and I assume my responsibilities,” Athanasiadis said. And finally veteran Georgos Lianis, relative to the second wife of former Greek Prime Minister Andreas Papandreou decided to submit is resignation.
Reaction by the ND main opposition party
The main opposition New Democracy (ND) party remained firm on its position as regards the consensus issue despite the ongoing pressure expressed once again after the latest interview by EU Commissioner for Economic and Monetary Affairs, Olli Rehn. ND spokesman Yiannis Mihelakis underlined that his party demands “what has already been included in the Portuguese and Irish memorandums”. “We demand what those two countries have managed to get,” he said and asked “why do they refuse to give us what they have given to those countries, for example, horizontal cuts from a point up”.
Combined reports (ANA)