Greeks Strike as Rescue Aid Delayed

AppId is over the quota
AppId is over the quota
October 05, 2011, 4:03 AM EDT By Tom Stoukas

(Updates stocks in second, eighth paragraphs. See EXT4 for more on the European debt crisis.)

Oct. 5 (Bloomberg) -- Hundreds of thousands of Greeks walked off their jobs at airports, schools, hospitals and even the Acropolis to protest Prime Minister George Papandreou’s 6.6 billion-euro ($8.7 billion) austerity plan, challenging a government seeking European bailout funds to stave off default.

Today’s 24-hour strike, the first this year that will shut the Athens International Airport for a full day, takes place after European Union ministers signaled they may renegotiate terms of Greece’s latest rescue, sending the nation’s stocks down the most in 17 months.

The country’s largest public-sector union, known as ADEDY and representing at least 400,000 state workers, called the walkout and a march on parliament to protest plans to put 30,000 public workers on reduced pay, raise property taxes and cut pensions and wages. The demonstration defies calls by the government to show unity in the struggle to avert a default.

“We are at the worst circumstances under the worst conditions,” Finance Minister Evangelos Venizelos said at a news conference in Athens yesterday. “We are dependent on the aid and loans of our institutional partners. That is the situation of the country. And we must make superhuman efforts to win this wager of history.”

Rising Debt

The government is dependent on outside financing as the economy contracts and the unemployment rate stands at more than double Germany’s. The Greek state, which employs about 750,000, carries a debt load that will reach 356.5 billion euros in 2011, or the equivalent of 161.8 percent of gross domestic product, the highest in the EU and three times the ratio of Poland.

The strike, which forced cancellation of 448 flights into and out of the Athens International Airport and closed schools, followed a decision by euro area finance ministers to delay the release of the next 8 billion-euro loan installment under a 110 billion euro bailout approved in May 2010 until after Oct. 13. The government has enough cash to operate until mid-November, Venizelos said.

Greece’s 10-year bonds fell today, pushing the yield up three basis points, or 0.03 percentage point, to 23.13 percent at 10:33 a.m. in Athens, more than double the rate on July 21, generic pricing for euro-denominated securities shows. Greece’s 4.59 percent bond due in 2016 rose 1 cent to 35.375 cents on the euro, cutting the yield to 35.1 percent. The bond was trading at 64 cents on July 22.

Stocks Slump

The nation’s ASE stock index rose today after tumbling 6.3 percent yesterday, the most since May 2010, led by a 15 percent slump in National Bank of Greece SA. The measure was up 0.8 percent at 735.90 in Athens. The euro weakened against the dollar and yen after Italy’s credit rating was cut and European policy makers signaled yesterday that private investors may need to take on bigger losses than earlier estimated as part of Greece’s bailout.

Violence during strikes in June caused 800,000 euros in damage to state property in Athens over two days as Papandreou battled for political survival in parliament.

The 59-year-old premier then won a confidence vote and backing for a new five-year package of budget cuts and state asset sales to secure further international aid by stemming defections from members of his Pasok party.

Venizelos introduced measures to plug the budget gap for 2011 and 2012, including a property tax approved by parliament on Sept. 27 and further cuts to pensions and wages for state workers, after inspectors from the International Monetary Fund and EU halted a review of Greece on Sept. 1.

‘Large Numbers’

While strikes and protests are common in Greece, the timing of the latest confrontation may cause investors to take notice, said Antonio Garcia Pascual, the chief southern European economist at Barclays Capital in London.

“It’s important to understand the degree of participation in these strikes,” he said in a telephone interview yesterday. “If it’s a massive demonstration with really large numbers, then surely investors will take note of that.”

Air traffic controllers and employees at the Hellenic Civil Aviation Authority are on strike for 24 hours today, the first all-day work stoppage for aviation workers this year. Aegean Airlines SA canceled all its flights and Olympic Air axed 89 flights, according to an e-mailed statement from both Athens- based carriers. Schools, archaeological sites and museums also are closed.

“We have workers who have had their wages cut by 40 percent and with the new measures it will surpass 50 percent,” ADEDY Chairman Costas Tsikrikas said by phone from Athens. “These measures, and all the measures that have been passed so far, are putting the heaviest weight on workers and pensioners, not on those who earn the most and have sent their money outside Greece to foreign banks.”

General Strike

The General Confederation of Labor, or GSEE, the country’s largest private sector union that represents workers at state- run companies and utilities, is participating in the walkout and called a general strike for Oct. 19.

Greece’s average unemployment rate is expected to climb to 16.4 percent next year from 15.2 percent in 2011, according to ministry forecasts. Germany’s jobless rate was 6.9 percent in September. The economy contracted 4.5 percent in 2010 and will shrink 5.5 percent this year, Finance Ministry forecasts show.

“We have taken decisions as a government and as a parliament but as a society we have not taken a clear decision,” Venizelos said yesterday. “Unfortunately our society, our country, is hostage to great contradictions.”

Employees at Hellenic Railways Organization, Greece’s state-run rail company, and the suburban rail network surrounding Athens are also taking part. Dockworkers, journalists, health-care and municipal workers have also joined the strike.

Public Transit

Public transit employees are working today in order to help carry protesters to central Athens for midday demonstrations and marches to parliament. Transit employees have held a series of 24-hour strikes and work stoppages since Sept. 2 to protest involuntary transfers and wage cuts that were part of an overhaul of the public transit industry adopted last year by Greece’s parliament.

Europe’s financial leaders are fighting on multiple fronts, trying to repair Greece’s economy while insulating Italy and Spain and shoring up banks that the IMF says face as much as 300 billion euros in credit risks.

Ministers are considering reshaping a July 21 agreement that foresaw investors contributing 50 billion euros to a second rescue package totaling 159 billion euros. The original accord calls for debt exchanges and rollovers, with private investors facing losses of 21 percent, according to the International Institute of Finance.

--Editors: Laura Zelenko, Maria Petrakis.

To contact the reporters on this story: Tom Stoukas in Athens at astoukas@bloomberg.net;

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net

View the original article here