Greece’s Prime Minister yesterday warned his crumbling coalition that the country faces “uncontrolled chaos” without a debt deal while a two-day strike and protests in Athens left at least 10 injured.
“A disorderly default would plunge our country in a disastrous adventure,” Lucas Papademos told the Cabinet after six members of the government, including a minister, resigned in protests against new austerity cuts demanded by Greece’s EU-IMF creditors.
“It would create conditions of uncontrolled economic chaos and social explosion ... sooner or later, (Greece) would be led out of the euro,” he warned.
“This is an hour of historic responsibility,” the PM added.
Greece was explicitly told by its eurozone partners this week that it must agree to austerity measures in order to secure the release of further loans under the €130 billion bailout pending since October. The rescue fund is essential to stave off bankruptcy on March 20, when Athens must repay nearly €14.5 billion ($19 billion) in maturing debt.
The belt-tightening measures, which have sparked protests and two general strikes, will be taken to a Parliament vote tomorrow.
Meanwhile, clashes erupted on the sidelines of union demonstrations against 15,000 civil service layoffs and cuts in wages and pensions.
Youths in hoods and motorcycle helmets broke up masonry around central Syntagma Square and haul stones at police, who responded with bursts of tear gas.
At least 10 people were injured including eight police officers and six arrests were made, a police source said.
Eurozone finance ministers on Thursday delayed a decision on a new bailout, giving Greek officials less than a week to meet tough conditions in exchange for fresh aid.
The ministers want Greek lawmakers to formally approve the measures, which include additional structural spending cuts of €325 million for 2012.
They also want a written pledge from coalition leaders that they will implement the reforms, Eurogroup chief Jean-Claude Juncker said in Brussels. If those conditions are met, the Eurogroup would meet again on Wednesday, he said.
Greece had announced on Thursday a last-minute general accord among the coalition parties on alternative ways of finding budget savings to meet EU-IMF demands.
But eurozone finance ministers deemed that there was still a shortfall and they were not prepared to accept this “general agreement.”
Instead, they want cast-iron commitments on the numbers.
The persistent instability sent stock exchanges down, with the Athens bourse slumping 3.23 per cent.
The tough position by European leaders marks a change of tone. Previously, they had insisted that a departure of Greece from the eurozone could not be contemplated.
Mr Papademos also said Greece was now aiming for state asset sales of at least 19 billion euros by 2015, instead of a previous target of €50 billion ($66 billion) but did not give a reason for the scaled down figure.