It's bailout or chaos: Lucas Papademos

Athens: Greek Prime Minister Lucas Papademos has told lawmakers to back a deeply unpopular international financial rescue in a vote Sunday or condemn the country to “uncontrolled economic chaos and social explosion.” He made the statement in a televised address to the nation ahead of the vote on €3.3 billion ($4.35 billion) in wage, pension and job cuts - the price of a €130 billion bailout from the European Union and International Monetary Fund. [caption id=“attachment_210582” align=“alignleft” width=“380” caption=“Papademos said parliament had a historic responsibility to back the bill. Reuters”]  [/caption] Papademos said parliament had a historic responsibility to back the bill, or face catastrophic consequences if Greece misses a 20 March deadline to service its debt. “A disorderly default would set the country on a disastrous adventure,” he said. “It would create conditions of uncontrolled economic chaos and social explosion.” “The country would be drawn into a vortex of recession, instability, unemployment and protracted misery and this would sooner or later lead the country out of the euro.” On a day of dire warnings and stormy debate, leaders of the ruling coalition told uneasy lawmakers Saturday to support the bill or be dropped from party lists for an election that could come by April. Athens faces a 20 March deadline to meet debt repayments of €14.5 billion. If the rescue package is put in place, its private sector creditors will have to accept a 70 percent reduction in the value of their holdings. The effort to ease Greece’s huge debt burden has brought thousands into the streets in protest, and there are signs of a small rebellion among lawmakers made nervous by the extent of the cuts and by how voters might punish them in the next election. At least 20 deputies from the two main parties in the Papademos coalition threatened Saturday to vote ‘No’ - but the bulk of the coalition’s 236 MPs are still all but certain to approve the package. Six members of his cabinet have resigned. More demonstrations are expected in front of the parliament on Sunday, after clashes between police and black-masked protesters Friday. Debt swap The assembly’s finance committee approved the bill on Saturday. Sunday’s debate in the full 300-seat chamber begins at 1200 GMT, and a vote is expected late in the evening. The measures include 300 million euros in pension cuts and a 22 percent reduction in the minimum wage, which currently stands at about 750 euros per month. The bill aims to cut Greece’s bloated state sector workforce by about 150,000 people by 2015. It also provides for a bond swap to ease Greece’s debt burden by cutting the real value of private investors’ bond holdings by some 70 percent. Finance Minister Evangelos Venizelos said the deal had to be approved by Sunday or the country would miss a February 17 deadline to submit the debt swap offer to its private-sector bondholders. Euro zone finance ministers also expect Greece to explain by then how 325 million euros ($430 million) out of this year’s total budget cuts – as yet unspecified – will be achieved before it agrees to the bailout. Bailout documents released Friday left blank the amount of the full rescue package, and Venizelos said Greece might need 15 billion euros more to save the country’s banks, confirming estimates from EU officials. The EU and IMF have been exasperated by a series of broken promises and weeks of wrangling over the bailout. They say they will not release the aid without clear commitments by the main party leaders that reforms will be implemented, whoever wins the next election. Reuters