Greece on strike as bailout deal in limbo

By Nicholas Paphitis

Associated Press

Published: Friday, Feb. 10 2012 5:33 a.m. MST

Protesters shout anti- austerity slogans outside the Greek Parliament during a demonstration in central Athens on Thursday, Feb. 9, 2012. Not long after Greece made the politically unpopular decision to slash government spending as a way to ease its debt crisis, Germany's finance minister questioned whether the deal goes far enough to earn a crucial 130 billion euro bailout.

Petros Giannakouris, Associated Press

ATHENS, Greece — Thousands took to the streets of Athens as Greek unions launched a two-day general strike against planned austerity measures on Friday, a day after the country's crucial international bailout was put in limbo by its partners in the 17-nation eurozone.

Police said some 17,000 people were gathering for two separate protests leading to Syntagma Square, outside Parliament. They chanted slogans against the painful cutbacks, which include reducing the minimum wage by 22 percent and cutting one in five government jobs in a country which is in its fifth year of recession.

Bailout creditors say Greece has not yet met demands for all the austerity measures, however. Frustrated by days of dithering, they have given political leaders in Athens until the middle of next week to meet the full list of required reforms. Otherwise, the country will lose its rescue loan lifeline, go bankrupt next month and likely leave the euro.

"We are experiencing tragic moments," Deputy Prime Minister Theodoros Pangalos told Parliament Friday. "These days are the last acts of a drama that we all hope will lead to a happy conclusion with a voluntary reduction in our public debt and implementation of a framework by 2015 that will allow the economy to stabilize."

The Greek coalition government, led by Prime Minister Lucas Papademos had hoped some of the heat had been taken out of the crisis after leaders agreed Thursday to a raft of austerity measures they hoped would pave the way for the €130 billion ($173 billion) bailout package.

However, finance ministers from the other 16 eurozone states put up a roadblock later in the day by insisting that Greece had to save an extra €325 million ($430 million), pass the cuts through a restive parliament and guarantee in writing that they will be implemented even after planned elections in April.

A Cabinet meeting has been called for the afternoon, while the majority Socialists and the conservatives were later to hold party meetings to discuss the cutbacks.

The new hurdles Greece has to clear to avoid a default that could send shockwaves around the global economy dented sentiment in the markets Friday. Stocks were down all over Europe, with the benchmark index in Athens 1.8 percent lower in early afternoon trading.

While facing intense pressure abroad, Greece is having to deal with another strike. The country's two biggest labor unions stopped railway, ferry and public transport schedules, and hospitals worked on skeleton staff while most public services were disrupted. Unions were planning protests in Athens and other cities around midday.

Prime Minister Papademos and heads of the three parties backing his government have already agreed to deep private sector wage cuts, civil service layoffs, and significant reductions in health, social security and military spending.

But the party leaders balked at demands for more cuts to already depleted pensions, later issuing nebulous assurances that a solution had been found.

"Unfortunately, the eurogroup did not take a final, positive decision," Finance Minister Evangelos Venizelos said after Thursday's talks in Brussels. "Many countries expressed objections, based on the fact that we did not fully complete the list of additional measures required to meet our targets for 2012."

"The choice we face is one of sacrifice or even greater sacrifice — on a scale that cannot be compared," Venizelos added.

Once all the demands have been fulfilled, the eurozone will give Greece the green light to start implementing a separate bond swap deal with banks and other private investors designed to slice some €100 billion ($132 billion) off Greece's debt load.

EU Commission President Jose Manuel Barroso on Friday offered hope a deal could still be struck.

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