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Greece bailout release unlikely next week

  • Article by: NICHOLAS PAPHITIS
  • Associated Press
  • November 8, 2012 - 5:41 AM

ATHENS, Greece - Greece is unlikely to get its hands on crucial bailout cash next week, Germany's finance minister indicated Thursday, even though the country's Parliament narrowly backed more unpopular austerity measures.

Germany's Finance Minister Wolfgang Schaeuble said Greece's euro partners are not in a position to make a decision on releasing new funds next week, as many in Athens had hoped.

"We're not there yet," Schaeuble said in Hamburg.

The 17 finance ministers of the eurozone meet on Monday and Greece is likely to top the agenda.

The approval of the austerity bill, which will further cut salaries and pensions and increase taxes, was a key step towards persuading Greece's international creditors to release the next (EURO)31.5 billion ($40.15 billion) installment of the country's vital bailout loans.

Without it, the government has said the country will start running out of cash Nov. 16. Schaeuble's comments suggest an interim financial arrangement may have to be agreed.

Parliament's vote in favor of (EURO)13.5 billion worth of spending cuts and tax increases came at a cost for Prime Minister Antonis Samaras' fragile three-party coalition government

Lawmakers voted 153-128 for the package, hours after more than 80,000 protesters demonstrated outside on the streets of Athens — some fighting running battles with riot police.

Only two — the majority conservatives and the Socialists — of the three parties in the coalition backed the austerity package. But there was also dissent in those ranks, with seven lawmakers expelled for failing to back the measures and an eighth saying he was leaving the Socialists to continue as an independent member of parliament.

Nevertheless, the government is not in imminent threat of collapse as the third party, Democratic Left, which abstained from the vote, insists it will continue as a coalition member.

Greece has relied on rescue loans from its euro partners and the International Monetary Fund since 2010. In return, it has had to implement a series of austerity measures which have hit the economy hard. Greece is set to enter its sixth straight year of recession.

Figures Thursday showed unemployment figures up at 25.4 percent in August, increasing from 24.8 percent in July and 18.4 percent the year before. More than 1.2 million people in this country of barely 10 million are now unemployed, with 58 percent of all young people aged 15-24 are unemployed.

Greece's (EURO)240 billion package is released in installments, depending on the country's progress in reining in its deficit and reforming the economy. But the latest payment has been delayed for five months, due to political uncertainty in the spring that forced two national elections in as many months and subsequent delays in agreeing on the new cutbacks.

Samaras' coalition faces another test on Sunday, when Parliament is to vote on the 2013 state budget. But this time all three coalition partners are expected to present a united front.

Greek investors reacted nervously to Thursday's vote, with Athens stocks down about three percent in morning trading.

Broad-circulation Ta Nea daily said in an editorial that Athens must now ensure it receives the new bailout payment in time, and kick start the economy.

"Greece has done what it agreed to do, and now it's the creditors' turn," the paper said. "Nobody can imagine that in four months' time (Greece's creditors) will be demanding new salary and pension cuts. Greece cannot take it — and in any case the government will not survive it."

The new cutbacks include further, deep pension cuts and tax hikes, a two-year increase in the retirement age to 67, and laws that will make it easier to fire and transfer civil servants who are currently guaranteed jobs for life.

Police in Athens arrested five suspected rioters during the clashes outside Parliament on Wednesday night, on the second day of a nationwide general strike. Seven policemen were injured in the fighting, in which masked anarchists rained petrol bombs on riot squads, who responded with tear gas and — for the first time in decades — water cannons.

Unions have pledged to hold new strikes and protests, and on Thursday taxi drivers and Athens metro, tram and urban rail workers walked off the job.

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Juergen Baetz in Hamburg and Elena Becatoros in Athens contributed.

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