Sunday, December 11 2016

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Greek parliament approves controversial pension, tax reforms

Update: May, 09/2016 - 12:00

ATHENS — Greek lawmakers on late Sunday adopted a controversial package of pension cuts and tax hikes despite mass public opposition, bowing to creditor demands in a bid to unlock the next tranche of badly-needed bailout funds.

The unpopular reforms, which saw tens of thousands take to the streets in protest, passed thanks to the Syriza-led government’s slim majority in the 300-seat parliament, with the 153 MPs of the far-left Syriza and the Independent Greeks coalition voting in favour of the measures.

As expected all the opposition parties voted against the bill, which will reduce Greece’s highest pension payouts, merge several pension funds, increase contributions and raise taxes for those on medium and high incomes.

They are the latest reforms demanded by the European Union and International Monetary Fund in exchange for fresh funds from Greece’s 86-billion-euro (US$95-billion) bailout agreed in July, the third for the debt-laden country since 2010.

The parliamentary vote came just hours before an emergency meeting of eurozone finance ministers in Brussels, who are racing to finalise a long-stalled first review of Greece’s reform efforts so Athens can repay the European Central Bank billions of euros in July – and stave off another eurozone crisis.

In the run-up to the parliamentary debate, angry unions staged a general strike that paralysed the country’s public transport for a third straight day on Sunday, while some 26,000 people took to the streets of Athens and Greece’s second city Thessaloniki in protest at the pensions and tax overhaul.

Brief clashes erupted outside the parliament in Athens ahead of the vote, with youths throwing Molotov cocktails and flares at riot police who responded with volleys of tear gas, AFP reporters saw.

’Root-and-branch reform’

Prime Minister Alexis Tsipras, who has said reform is needed to prevent the pension system collapsing in a few years, defended the changes in parliament earlier Sunday, which are part of the government’s pledge to achieve 5.4 billion euros in spending cuts by 2018.

"The system requires root-and-branch reform that previous governments have not dared to undertake," he told lawmakers.

He also highlighted the fact that ministers from the 19 eurozone countries meeting on Monday will for the first time look at easing Greece’s crippling debt burden, one of the only concessions granted to Tsipras when he secured the bailout.

"Tomorrow is a very important day. After six years (of crisis), the Eurogroup will meet to discuss debt relief," he told lawmakers.

In its official agenda for Monday, the Eurogroup said it would review the "progress achieved" by Greece as well as discussing "possible debt relief measures."

Tensions have flared in Greece over the fresh austerity demands, with police saying some 18,000 protesters turned out in Athens Sunday and another 8,000 gathered in Thessaloniki, many of them supporters of the communist-leaning PAME trade union.

Numbers were, however, significantly down on February protests when 40,000 people marched in Athens alone.

"People are tired and disappointed by the leftist government in power... the rallies have not had the scale we had expected," said Maria, a private sector employee in her fifties who claims to be owed 30,000 euros ($34,000) in back pay from her employer.

Ahead of the Brussels meeting, differences between the creditors themselves have emerged over extra reforms demanded by the IMF that could amount to another 3.6 billion euros of cuts by Greece.

IMF chief Christine Lagarde has warned that there were "significant gaps" in Greece’s reform offers, while European Commission head Jean-Claude Juncker said Athens had "basically achieved" the objective of the measures required by creditors.

Greek Finance Minister Euclid Tsakalotos has called on the eurozone to back the reforms, warning of a "failed state" if the Brussels talks run aground.AFP

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