We need your help now

Support from readers like you keeps The Journal open.

You are visiting us because we have something you value. Independent, unbiased news that tells the truth. Advertising revenue goes some way to support our mission, but this year it has not been enough.

If you've seen value in our reporting, please contribute what you can, so we can continue to produce accurate and meaningful journalism. For everyone who needs it.

Greek protesters outside the Greek embassy in London last week. AP Photo/Lefteris Pitarakis

Second Greek bailout "roughly equal" to earlier €110bn package, says PM

Greek Prime Minister Papandreou has dismissed calls to default on national debt.

GREECE IS talking with international creditors about a second bailout package “roughly equal” to the first €110 billion rescue it accepted a year ago, the prime minister confirmed today.

George Papandreou also blamed Greece’s bloated and inefficient state sector for bringing the country to its knees and vowed to effect deep changes with a fall 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 popular 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 IMF.

Confidence vote

“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 culminates Tuesday in a confidence vote.

He dismissed any calls to default on the country’s massive 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 will appoint an independent commission of up to 25 people to collect proposals from citizens and submit a report before the fall vote.

Papandreou said the constitutional revision will make it easier to prosecute delinquent government officials, now protected by a strict statute of limitations. He added 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 International Monetary Fund are demanding that Greece pass new austerity measures before they release the next €12 billion loan from the first rescue package.


Many experts say Greece’s debt load is too great and expect it to eventually default. The European Central Bank, however, has been adamant that a Greek default is unthinkable because it could set off an unpredictable chain reaction that would badly hurt European banks, roil markets and make it harder for other indebted countries to cope. The ECB also has significant exposure to Greek debt.

Spooked by financial markets’ reaction to Greece’s political turmoil, Germany on 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 today at a 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.

Instead, he blamed ratings agencies, tax havens, “derivatives speculators” and the media for allegedly spreading panic and discouraging potential investors.

With 155 deputies in the 300-seat parliament, Papandreou is expected to win the confidence vote. His next task is to pass the new austerity package by the end of the month, despite near-daily protest marches and sit-ins.

Protesters who flock each afternoon to Athens’ central Syntagma square in front of parliament have been wearing stickers saying “We owe nothing, we’ll sell nothing, we’ll pay nothing” — rejecting creditors’ demands to sell off state assets. Keeping up the anti-austerity drumbeat, GENOP, the powerful union of state electric employees, was to begin rolling 48-hour strikes at midnight Sunday, threatening blackouts across the country.

Unions are planning a 48-hour general strike on the date, yet to be determined, when parliament votes on the new austerity package.

- AP

Read: Noonan pushing bondholder burden-sharing at EU meeting on Greek debt crisis >

Read: Fresh warning of Greek debt contagion – for Ireland >

Readers like you are keeping these stories free for everyone...
A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article. Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation.

Your Voice
Readers Comments
    Submit a report
    Please help us understand how this comment violates our community guidelines.
    Thank you for the feedback
    Your feedback has been sent to our team for review.