Business World

Thursday 22 March 2018

Greece erupts in violence as EU issues dire ultimatum

Athens warned failure to support unpopular economic austerity proposals will trigger an immediate default

Rioters use firebombs and stones against the police
Rioters use firebombs and stones against the police
A Greek Orthodox priest stands near riot police during the protests
A general view of Syntagma Square outside the Greek parliament yesterday
A rioter wears a gas mask for protection against tear gas which was used by police

Anti-austerity protests turned violent in Athens last night as the EU warned Greek lawmakers that the country faces immediate default unless they back an unpopular economic plan this week.

Hooded youths throwing stones and wielding sticks set fire to garbage bins and a telecoms truck outside parliament and riot police fired teargas to disperse them. Trade unions began a 48-hour strike against the EU/IMF-imposed measures.

It came as German banks moved closer to participating in a Greek bailout ahead of tomorrow's summit called by the German government to discuss private-sector involvement.

German banks have agreed in principle to use a French proposal, for banks to roll over some Greek debt for 30 years, as the basis for negotiating private-sector participation in a Greek debt rollover, sources said.

"The French proposal should form the basis for working out a German decision," one of the sources said.

French banks, the most exposed to the Greek crisis, have reached an outline agreement to roll over holdings of maturing Greek bonds as part of a wider European plan to avoid sovereign default

The blunt alternative was underscored by Bank of England governor Mervyn King, who told British parliamentarians that policymakers were working on ways to limit the damage from a potential default on Greece's €340bn debt pile.


"What we're doing is to say there is sufficient concern in the market about the possibility of default for us to think about contingency plans and the consequences of this event," Mr King said.

He urged greater transparency about sovereign exposures to prevent a sudden, broad-based loss of confidence in European banks in the event of a Greek default, which could trigger a new credit crunch.

The head of the Greek Central Bank said it would be suicide if the Greek parliament voted against the plan.

By nightfall, several hours of clashes involving hundreds of youths had subsided and central Athens had been reclaimed by thousands of peaceful protesters denouncing measures they say hit salaried workers and the unemployed while sparing the rich.

Some 5,000 police were drafted in, mostly to protect the colonnaded parliament building on Syntagma Square, focal point of weeks of mass demonstrations, some modelled on the encampment of unemployed Spanish "indignados" in Madrid.

The EU and IMF have said Greece must enact both the five-year austerity plan, with €28.6bn in savings, and key laws for structural reforms and state asset sales to secure the next €12bn slice of aid in July.

Without that, Athens would run out of money within weeks unless it received some outside lifeline.

Risk premiums on lower-rated eurozone government debt fell on news that German banks had agreed in principle to use a French proposal as a basis for negotiating private-sector participation in a Greek debt rollover.

The euro also hit a session high against the dollar, with fears of a Greek default offset by signs that European authorities and banks are making progress on a debt rollover.

Prime Minister George Papandreou's Socialists hold a narrow majority with 155 seats in the 300-member legislature, but a handful of lawmakers have defected and others are threatening to vote against some or all of the measures, putting the outcome in doubt.

One possible scenario that could cause trouble would be if parliament approved the five-year austerity plan but voted down some of the implementing bills. Conservative opposition leader Antonis Samaras reiterated his opposition to the austerity plan. (Reuters)

Irish Independent

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