Papandreou blames state sector as Greece seeks second bailout
Source: Agencies |
June 20, 2011, Monday
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Greece is talking with international creditors about a second bailout package "roughly equal" to the first 110 billion euro (US$157 billion) rescue it accepted a year ago, Prime Minister George Papandreou confirmed yesterday.
He also blamed Greece's bloated and inefficient state sector for bringing the country to its knees and vowed to effect deep changes with a referendum on the constitution that would make it easier to get rid of inept officials or workers.
His proposals were a populist response to widespread anger at politicians as austerity measures cut deeply into disposable incomes. Riots erupted on the streets of Athens last week against a new round of spending cuts and tax hikes being demanded by the European Union and the International Monetary Fund.
"I ask for a vote of confidence because we are at a critical juncture ... the debt and deficits are national problems that have brought Greece into a state of dependence that may have protected us from bankruptcy, but which we need to get out of," Papandreou said, opening a three-day parliamentary debate that will end tomorrow in a confidence vote.
He dismissed calls to default on the country's debt, saying this would be "a catastrophe for households and banks alike" and made it clear he would not back off from efforts to reduce the debt.
Papandreou called for an autumn referendum on changes to the political system, including to the country's constitution. He said he would appoint an independent commission of up to 25 people to collect proposals from citizens and submit a report before the vote.
Papandreou said the constitutional revision will make it easier to prosecute delinquent government officials, now protected by a strict statute of limitations. He said other changes would include reducing the number of deputies, more transparent funding of political parties and candidates and a new electoral system, possibly even with term limits.
European donors and the IMF are demanding that Greece pass new austerity measures before they release the next 12 billion euro loan from the first package.
The European Central Bank has been adamant that a Greek default is unthinkable because it could set off an unpredictable chain reaction that would badly hurt banks, roil markets and make it harder for other indebted countries to cope.
Spooked by financial markets' reaction to Greece's political turmoil, Germany last Friday dropped its demand that the private sector be forced to share in the pain of a second Greek bailout.
Papandreou also reshuffled his Cabinet and named a new finance minister, Evangelos Venizelos, who was in Luxembourg yesterday at an EU finance ministers meeting.
Papandreou said the original loan's assumption that Greece would be able to borrow from the markets in 2012 was no longer valid, but insisted his Socialist government had done all it was required to, passing painful austerity measures and reducing the deficit as a percentage of GDP by 5 percent in 2010.
He blamed ratings agencies, tax havens, "derivatives speculators" and the media for spreading panic and discouraging potential investors.
Opposition leader Antonis Samaras called for early elections and said Papandreou's proposal was an evasive maneuver masking his inability to govern.
In a protest against austerity measures, GENOP, the powerful union of state electric employees, was due to begin rolling 48-hour strikes at midnight last night, threatening blackouts across the country.
He also blamed Greece's bloated and inefficient state sector for bringing the country to its knees and vowed to effect deep changes with a referendum on the constitution that would make it easier to get rid of inept officials or workers.
His proposals were a populist response to widespread anger at politicians as austerity measures cut deeply into disposable incomes. Riots erupted on the streets of Athens last week against a new round of spending cuts and tax hikes being demanded by the European Union and the International Monetary Fund.
"I ask for a vote of confidence because we are at a critical juncture ... the debt and deficits are national problems that have brought Greece into a state of dependence that may have protected us from bankruptcy, but which we need to get out of," Papandreou said, opening a three-day parliamentary debate that will end tomorrow in a confidence vote.
He dismissed calls to default on the country's debt, saying this would be "a catastrophe for households and banks alike" and made it clear he would not back off from efforts to reduce the debt.
Papandreou called for an autumn referendum on changes to the political system, including to the country's constitution. He said he would appoint an independent commission of up to 25 people to collect proposals from citizens and submit a report before the vote.
Papandreou said the constitutional revision will make it easier to prosecute delinquent government officials, now protected by a strict statute of limitations. He said other changes would include reducing the number of deputies, more transparent funding of political parties and candidates and a new electoral system, possibly even with term limits.
European donors and the IMF are demanding that Greece pass new austerity measures before they release the next 12 billion euro loan from the first package.
The European Central Bank has been adamant that a Greek default is unthinkable because it could set off an unpredictable chain reaction that would badly hurt banks, roil markets and make it harder for other indebted countries to cope.
Spooked by financial markets' reaction to Greece's political turmoil, Germany last Friday dropped its demand that the private sector be forced to share in the pain of a second Greek bailout.
Papandreou also reshuffled his Cabinet and named a new finance minister, Evangelos Venizelos, who was in Luxembourg yesterday at an EU finance ministers meeting.
Papandreou said the original loan's assumption that Greece would be able to borrow from the markets in 2012 was no longer valid, but insisted his Socialist government had done all it was required to, passing painful austerity measures and reducing the deficit as a percentage of GDP by 5 percent in 2010.
He blamed ratings agencies, tax havens, "derivatives speculators" and the media for spreading panic and discouraging potential investors.
Opposition leader Antonis Samaras called for early elections and said Papandreou's proposal was an evasive maneuver masking his inability to govern.
In a protest against austerity measures, GENOP, the powerful union of state electric employees, was due to begin rolling 48-hour strikes at midnight last night, threatening blackouts across the country.
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