Greeks protest at new debt cuts vote

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The Independent Online

Athens is braced for a stormy day of protests that will culminate tonight in a vote on a controversial set of austerity measures that EU leaders have demanded of Greece in return for another economic bailout.

The country's powerful public sector unions have called for a mass action to “overthrow” the austerity measures and tens of thousands of protesters from all walks of life are expected to descend on parliament today.

The Greek government has been told by the EU and IMF that it must pass the Euro 28bn package of cuts, tax increases and an unprecedented sell-off of public assets in order to get the last instalment of its previous bailout, without which it would default on its debts by mid-July.

Greece's Prime Minister George Papandreou dragged his beleaguered socialist party through a confidence vote last week but faces a far harder task persuading MPs to vote for more austerity against a backdrop of furious public protests and a shrinking economy.

Government sources said they were “confident” that enough parliamentarians from the ruling party would back the measures although a handful of defectors are expected to vote against. Several MPs from smaller parties are likely to vote with the government but a “no” vote remains a possibility, with analysts warning that this could plunge Greece into a disorderly default and exit from the Euro.

However, there are few signs that the first bailout and accompanying austerity measures have worked and little Greek public faith that a repeat dose will correct the country's debt crisis.

Yannis Varoufakis, a Greek economist who proposes that the European Central Bank (ECB) should issue euro-bonds to solve the bloc's sovereign debt crisis, said the package was “catastrophic” and should be voted down: “It's a litany of failures waiting to happen,” he warned.

Some analysts accuse the EU leadership and the ECB of using a short term fudge to delay politically difficult decisions on a crisis that threatens the banking sector and the European single currency.

“A big fat no would energise the political leadership and we could see a real solution emerge quickly,” added Mr Varoufakis.

The government has defended the measures and warned that Greece faces a plunge into the “abyss” unless the country unites behind its reform drive. The biggest concerns centre on the privatization drive that is meant to raise Euros 50bn to address Greece's national debt currently running at 160 percent of GDP. The possible sale of the country's public utilities, which have been criticised for wasting public money and delivering poor services, has been a bitter battleground for much of the last 15 years.

The new measures call for the public assets to be sold off at a rate of one every two to three days – a schedule that some observers believe is unrealistic.