Greek debt inspection stalled by protests

Striking civil servants occupied the Transport Ministry building in Athens early Friday, forcing international debt inspectors to reschedule a meeting where they were to discuss reforms, including new licensing laws for taxis.

Transport Minister Yannis Ragoussis's morning meeting was delayed to the evening after the debt inspectors, collectively known as the troika, arrived to find the building under occupation and protesting employees in the courtyard.

A similar meeting Thursday with Finance Minister Evangelos Venizelos was moved to a different government building in central Athens due to an occupation of that ministry.

"This is our answer to those who seek to further degrade our lives ... Our aim is to overturn this barbaric policy," said Ilias Vrettakos, deputy leader of the civil servants union, ADEDY.

The union fiercely opposes a new round of pay cuts, due to take effect on Nov. 1, and the government's plans to suspend at least 30,000 of their members on reduced pay.

A senior government official said key details of suspension plan were to be worked out at an emergency Cabinet meeting Sunday. He asked not to be named, pending official announcements.

At the Finance Ministry, protesting employees continued their occupation for a second day, guarding the entrance where the words "They shall not pass" had been spray-painted across drawn-down metal shutters, and Venizelos again met the debt inspectors in another building.

The inspectors from the International Monetary Fund, European Central Bank and European Commission returned to Athens this week after suspending their review earlier this month over missed targets and delayed implementation of reforms. Their approval is critical for Greece to receive the next €8 billion installment of its €110 billion ($150 billion US) bailout loan package agreed on last year.

Without the next batch of loans, Greece has said it only has enough funds to last it through mid-October, after which it will be unable to pay salaries and pensions.

Mired in a deep recession and faced with growing anger on the streets, the government has been unable to meet all the targets set out in its bailout agreement. Other European countries, faced with the possibility of a messy Greek default that would drag down their common currency and cause significant problems for their banks, approved a second, euro109 billion bailout for Greece on July 21. But the details of the deal remain to be finalized, and some have suggested the plan needs to be reworked.

In a rush to ensure the return of the troika and approval of the sixth batch of bailout loans, the government this month announced a series of new measures, the civil service suspensions and a new property tax to be levied through electricity bills.

At banks, tax offices and postal outlets, Athenians waited stoically in huge lines to pay the first installment of a separate emergency tax bill and register for a national census of pensioners, set up to eliminate fraudulent claims.

"It's been crazy today. But at least we've got extra staff to handle it," said Viki Dionelli, a worker at a central Athens post office. She joked to one customer: "See you again next year."

Greeks have been outraged by the new cuts after more than a year of austerity which has seen salaries and pensions trimmed and several waves of tax increases on income, property and consumer goods. Unions have held daily demonstrations in central Athens, with many gathering to burn notices demanding an emergency tax.

College students, former military officers, and workers at a health ministry home assistance program staged separate protest rallies Thursday.

Civil servants have declared a 24-hour strike for Oct. 5, which air traffic controllers have said they will join, effectively grounding all flights to and from the country. A nationwide strike has been declared for Oct. 19.

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Greek bond rates soar

Concerns that the latest bailout for Greece could unravel pushed interest rates on Greek 10-year bonds to record highs Thursday.

The 10-year bond yield climbed above 18 per cent. The Greek government's cost of borrowing money for 10 years is now 16 percentage points higher than Germany's.

Markets are concerned that demands from Finland, a Greek creditor, for collateral in return for rescue loans could undermine the latest rescue package.

Greece has been relying since last year on funds from a €110 billion ($156 billion Cdn.) package of bailout loans from other European Union countries and the International Monetary Fund.

On July 21, European leaders agreed on a second bailout, worth an additional €109 billion.

In Finland earlier this year, a nationalist, anti-bailout party won a large share of the votes in national elections. Since then, the Finnish government has struck a deal with Greece to secure cash guarantees for its share of the contributions to the bailout fund.

The other eurozone countries must still approve that arrangement. But if it goes through, four other contributors — the Netherlands, Austria, Slovenia and Slovakia — have said they will seek the same terms.

That has thrown into question whether the second bailout will unravel.

Other eurozone nations, including powerful Germany, oppose the deal because the collateral would come from the new bailout loans.

Finland has said it will not back down, although Prime Minister Jyrki Katainen said his government was open to amending details of the agreement.

The Greek government has been struggling to meet the targets laid out in the bailout agreements, imposing new austerity measures such as increased taxes and cuts to public sector pay and other spending.

Separately, Deputy Development Minister Haris Pamboukis resigned Thursday, following a dispute in a cabinet meeting over implementing spending cuts, adding to the perception that the government is divided as it struggles to deal with its debt crisis.

With files from The Associated Press Accessibility Links

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