Strikes hit Greece as govt eyes more austerity

By ELENA BECATOROS | June 9, 2011 | 5:57 AM EDT

A woman passes outside the central train station of Athens during a strike, on Thursday, June 9, 2011. All train services in Greece have been suspended after state railway employees launched a series of strikes against planned reforms. Workers at state-run companies walked off the job in a series of work stoppages Thursday to protest the government's privatization plan in Greece's renewed push to meet the terms of its international bailout.(AP Photo/Petros Giannakouris)

ATHENS, Greece (AP) — Workers at state-run companies walked off the job in a series of work stoppages Thursday to protest the government's privatization plan in Greece's renewed push to meet the terms of its international bailout.

Several hundred strikers gathered in central Athens for a rally and demonstration, as Prime Minister George Papandreou prepared to convene his Cabinet to approve more austerity measures for this year and through 2015. Parliament will then vote on the measures.

Papandreou and his ministers have come under intense criticism from their own Socialist party deputies in a series of recent marathon meetings over the plans, which include a remedial euro6.4 billion ($9.4 billion) package of cuts and tax hikes for this year, a renewed austerity drive for 2012-2015 and a euro50 billion ($73 billion) privatization program.

Under the slogan "we won't sell," workers at state companies were holding strikes throughout the day. Public transport workers were walking off the job in the early morning and late evening, while port workers, post offices and banks called a 24-hour strike. Television station technicians were also on strike, as were journalists at the state-run broadcaster, disrupting live news programing.

Two demonstrations were planned in Athens, while a broader strike is to be held on June 15.

The prospect of new measures has led to outrage. Angry Greeks have taken over the central Syntagma Square, setting up a tent city in a sit-in, while tens of thousands of people thronged the square, which lies in front of Parliament, last Sunday.

While deputies from Papandreou's governing PASOK party have become increasingly vocal in their criticism of ministers, none have said outright they will not vote for the plan in Parliament, where PASOK holds a six-seat majority in the 300-member legislature.

Since May 2010, Greece has been relying on funds from a euro110 billion package of rescue loans from the International Monetary Fund and other eurozone countries to prevent it from defaulting on its massive debts. In return, it has taken a series of austerity measures, including cutting civil service salaries, trimming pensions and increasing taxes across the board.

But they have not been enough, and it is now clear that consistently high interest rates will almost certainly prevent the country from borrowing on the international bond market next year, as the bailout plan had initially envisaged.

This means Greece risks not having enough funds to service its debt next year unless it receives additional help beyond the current bailout. It also raises problems for the continued disbursement of the current bailout loans, which Greece has been receiving in installments.

Athens expects to get the next tranche, worth euro12 billion, next month, but IMF regulations stipulate that the institution cannot release the money until the funding gap Greece faces next year is corrected.

EU officials have been working on trying to find a solution, possibly a new bailout.

The country has been consistently slipping on many of its targets under the initial bailout, and the government now finds itself forced to push through the new spending cuts and tax hikes.

While all the details of the plans have not been officially released, leaks have indicated they will include tax increases on fuel, property, soft drinks and tobacco, as well as on restaurants and bars. The threshold below which income is not taxed will be reduced significantly, while more taxes could also be imposed on pensioners.