He spoke in a televised address to the nation, ahead of today’s vote on €3.3 billion (RM13.2 billion) in wage, pension and job cuts as the price of a €130-billion bailout from the European Union and International Monetary Fund.
The effort to ease Greece’s huge debt burden has brought thousands into the streets in protest, and there were signs yesterday of a small rebellion among lawmakers uneasy with the extent of the cuts.
Papademos said parliament had a historic responsibility to back the bill, or face catastrophic consequences if Greece missed a March 20 deadline to service its debt.
“A disorderly default would set the country on a disastrous adventure,” he said. “It would create conditions of uncontrolled economic chaos and social explosion.
“The country would be drawn into a vortex of recession, instability, unemployment and protracted misery and this would sooner or later lead the country out of the euro.”
Parliament’s finance committee approved the bill yesterday, and a full vote in the chamber is expected late today.
The Papademos coalition has a huge majority, which should ensure parliament approves the package needed to secure Greece’s second bailout since 2010.
But the number of dissenters is growing.
About 20 MPs belonging to the two major parties backing Papademos shrugged off threats from party leaders and warned they might reject the bailout. It would take more than 80 rebels to scupper the law.
Six members of the Papademos cabinet have already resigned.
Incalculable consequences
In an interview with the newspaper Imerisia, Deputy Finance Minister Filippos Sachinidis described the catastrophe he believed Greece would suffer if it failed to meet debt repayments of €14.5 billion euros next month.
“Let’s just ask ourselves what it would mean for the country to lose its banking system, to be cut off from imports of raw materials, pharmaceuticals, fuel, basic foodstuffs and technology,” he said.
About 7,000 protesters gathered in Athens, police said, but there was no repeat of the tear gas and petrol bombs of Friday.
Members of the conservative New Democracy party, which has a big lead in opinion polls before elections possible in April, are likely to back the deal solidly. About 10 have threatened not to.
“This is obviously an issue of party discipline,” party leader Antonis Samaras told his lawmakers in parliament, warning anyone who voted “No” “will not be a candidate in the next election”.
Former Socialist prime minister George Papandreou, who negotiated the first bailout before his government collapsed in November, acknowledged the pressure.
“I’ve lost friends, my family suffered, I gave up my office, I was insulted, vilified, like no other politician ever was in this country,” he told PASOK’s parliamentary group.
“Still, all that is nothing compared with what our people will suffer if we fail to do the right thing.”
Party discipline is much weaker at PASOK, whose support has dived to 8 per cent in the latest opinion polls from the nearly 44 per cent it commanded when Papandreou led it into power in 2009.
The deal includes a bond swap to ease Greece’s debt burden by cutting the real value of private investors’ bond holdings by some 70 per cent.
Fifteen billion more?
The chief negotiator for private creditors in the debt swap deal, Charles Dallara, urged a “Yes” vote, saying the deadlines allowed “no room for slippage”.
“It is important for lawmakers to understand what is at stake,” Dallara told Kathimerini newspaper.
Lawmakers needed to approve the deal by today, otherwise the country would not make a February 17 deadline to submit the debt swap offer to its private-sector bondholders, Finance Minister Evangelos Venizelos said yesterday.
Euro zone finance ministers have told Greece that by then it must also explain how €325 million out of this year’s total budget cuts will be achieved before it agrees to the bailout.
Bailout documents released on Friday left blank the amount of the rescue. Venizelos said €15 billion more might be needed to rescue the country’s banks, confirming estimates from EU officials.
The EU and IMF have been exasperated by a series of broken promises and weeks of wrangling over the bailout. They will not release the aid without clear commitments by the main party leaders that reforms will be implemented, whoever is in power.
The uncertainty has upset world financial markets, with stocks snapping a five-day winning streak on Friday and the euro tumbling.
The bill, approved by the cabinet on Friday along with hundreds of pages of accompanying documents, sets out reforms including a 22 per cent cut in the minimum wage, pension cuts worth €300 million this year, as well as health and defence spending cuts.
The government promised to speed up implementation of reforms in the labour, product and services markets, cut spending, and push through a privatisation plan. — Reuters
