Tuesday, January 17, 2012

Greeks strike against austerity as EU, IMF visit

Striking Greek workers brought the Athens metro to a standstill on Tuesday and kept ferries docked to protest against austerity as the country's lenders visited Athens to try to avert a disorderly debt default.

EU, IMF and ECB officials start combing through Athens' books on Tuesday as part of efforts to put together a 130-billion-euro rescue package that Greece needs to stay afloat when a major bond redemption comes due in late March.

Greeks have been hit hard by tax hikes and wage cuts meant to put the Mediterranean nation's finances back on track with a first bailout agreed in 2010. Greece has entered its fifth consecutive year of austerity-fuelled recession, with unemployment reaching a record high of 17.7 percent.

No ferries left from Athens' main ports on Tuesday, buses will only work part of the day, bank employees are also expected to walk off the job and labor unions will stage rallies to coincide with the start of the EU/IMF visit.

"We demand that austerity policies are abandoned and that the legislation that crushes our labor and insurance rights and turns workers into slaves is abolished," the EKA labor union, which represents workers in Athens, said in a statement.

The EU/IMF inspection visit is closely linked with Athens' efforts to agree with banks on a deal to slash its debt of over 350 billion euros by 100 billion euros.

Without the so-called "PSI" deal, which would see creditors voluntarily giving up a lot of their promised returns, the EU and IMF have warned they will consider that Athens' debt is not on a sustainable track and will not release further aid.

The EU/IMF bailout plan would include money to recapitalize Greek banks, which hold a big chunk of their country's debt.

One diplomat said: "If the PSI is successful you will need transfusion for the Greek banks, and for that you need money from the bailout plan."

Athens is running out of time and needs an agreement with banks within days to avoid going bankrupt when 14.5 billion euros of bond redemptions fall due on March 20.

But talks broke down on Friday over the interest rate on new bonds Greece will offer and a plan to enforce investor losses. Negotiations were suspended until Wednesday, and Athens sent senior officials to Washington to consult with the International Monetary Fund.

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