Greece’s new technocrat prime minister said he was confident fractious politicians would soon provide a written commitment to painful austerity measures as demanded by the EU that will unlock funds needed to stave off bankruptcy.
But as Lucas Papademos tried to reassure EU officials in Luxembourg, the conservative New Democracy party reiterated its refusal to sign any pledge and Greece’s main private and public sector trade unions called a 24-hour strike for December 1.
It will be the first major strike since Papademos, a former vice president of the European Central Bank, formed his three-party coalition to secure payment of an 8 billion euro aid tranche to avert default in December, Reuters reports.
“Our partners demand written commitments. They want political leaders to send a letter of commitment over the policies which will be implemented in the coming years,” Papademos told reporters after talks with Eurogroup head Jean-Claude Juncker in Luxembourg.
“I believe party leaders will fulfil their duty. I’m optimistic that a solution will be found soon. This must be done by the end of the month.”
While two parties, the Socialist PASOK of fallen premier George Papandreou and the far-right LAOS, have signalled readiness to sign, New Democracy leader Antonis Samaras has infuriated EU leaders by insisting his verbal consent is sufficient.
The European Union and International Monetary Fund want the written commitment because they suspect party leaders might otherwise try to wriggle out of their responsibilities, especially with an election pencilled in for February 19.
“It has to be clear that there is also commitment from the largest opposition leader (Samaras) to implement the package of reforms. Saying that words are enough – we have passed that stage,” Dutch Finance Minister Jan Kees de Jager said.
“We want a signature from this Mr Samaras. Otherwise they (Greece) won’t get money, absolutely not,” De Jager told Dutch television station RTL 7.
The Netherlands, Germany and Finland – three of the most fiscally sound euro zone countries who particularly resent having to bail out debt-ridden Greece – will meet on Friday to discuss latest developments in Athens, De Jager said.
Political analysts say Samaras wants to distance himself from the austerity measures and boost his party’s support ahead of an election in which he has said he believes he can win a majority to govern Greece alone.
Opinion polls show New Democracy ahead of its rivals but unlikely to be able to form a majority government.
Samaras, a Harvard-educated economist, has long opposed the tax hikes and spending cuts backed by Papandreou, his bitter rival and former college roommate, arguing that Greece – now in its fourth year of recession – needs pro-growth policies.
“Everything that has been done (by Samaras) is sufficient and complete,” New Democracy spokesman Yannis Mihelakis told the private ANT1 television channel, referring to the party’s support for the Papademos coalition and its 2012 draft budget.
Papademos, who was also due to meet the head of the European Central Bank Mario Draghi in Frankfurt later on Tuesday, said his government was focussed on tackling the immediate economic challenges facing Greece.
“I believe the new government will overcome the crisis and achieve fiscal consolidation in Greece,” he said, adding its plans included steps to boost the economy’s competitiveness.
Along with the December aid tranche, Greece is also hoping its creditors will approve a 130 billion euro bailout agreed last month to keep it afloat until 2014. This will replace the original 110 billion package that has made up its aid so far.
But Papademos’s government faces a number of hurdles in implementing reforms, including staunch opposition by unions and a population angered by years of austerity that have deepened Greece’s recession and lowered living standards.
STRIKE LOOMS, AGAIN
GSEE, the country’s umbrella trade union representing about 2.5 million private sector workers, called a strike for December 1 to protest against the 2012 budget, which is scheduled to be approved by parliament on December 7.
“The strike is against this budget of austerity and social spending cuts,” GSEE spokesman Stathis Anestis said.
Public sector trade union ADEDY, which represents about 500,000 state employees, said it too would join the walkout. It also said unions planned some sort of action on December 7.
The 2012 budget includes a series of tax increases and spending cuts to ensure the budget deficit falls to at least 6.7 percent of GDP next year from 9 percent in 2011.
Greece’s trade unions have staged numerous strikes and demonstrations since the debt crisis forced authorities to start taking austerity measures two years ago.
Finance Minister Evangelos Venizelos told lawmakers from his PASOK party on Tuesday he did not envisage a need for more austerity measures for 2012 once the budget is approved but they may be required for 2013-14.
He also reiterated that Greece’s exit from the euro – advocated by some commentators – was completely out of the question, he but took a swipe at the monetary orthodoxy of the European Central Bank.
“Price stability, the dogma on which the ECB’s operations are structured, is now leading to the risk of deflation,” Venizelos said.
The ECB, backed by Germany, has resisted international calls to print money through “quantitative easing” to ease pressure on euro zone governments battling a big increase in their borrowing costs as market confidence collapses.
The ECB and Berlin are also opposed to eurobonds, though Papademos – echoing Juncker and other officials – said in Luxembourg on Tuesday they could help tackle the crisis.