By Maria Petrakis and Natalie Weeks March 11 (Bloomberg) — Greece’s hospitals, airports and schools were shut today as unions stage the second general strike this year to protest Prime Minister George Papandreou ’s latest budget cuts to curb the European Union’s biggest deficit. An air-traffic controllers’ walkout forced the cancellation of flights, including 479 from Athens International Airport , the country’s largest. Bus and subway drivers, doctors, power workers, journalists and teachers are also protesting 4.8 billion euros ($6.5 billion) of wage cuts and tax increases. “The measures taken so far are unjust, demanding sacrifices from workers that aren’t being demanded from the employers, businessmen and bankers that created this crisis,” said Stathis Anestis, spokesman for the GSEE union, which represents 2 million workers in the private sector. The government’s latest budget cuts, the third package of measures this year, has triggered a new wave of protests in Greece, while being praised by EU officials and rewarded by investors. The risk premium investors demand to buy Greece debt over comparable German bonds has narrowed from an 11-year high on Jan. 28 and Greece was able to sell 5 billion euros of bonds to finance a day after announcing the package. Storming Parliament The Athens benchmark general index has gained 6 percent since the measures were announced on March 3, outperforming other western European benchmarks. Greek workers are anything but supportive. On March 5, striking workers shut down transport and tried to storm parliament as lawmakers passed the new budget cuts that Finance Minister George Papaconstantinou said will show EU allies and investors that Greece is making good on its deficit pledges. “The main risk is not that adjustment in Greece is not feasible, but that Greek society will refuse to shoulder the inevitable near-term economic pain,” Deutsche Bank analysts including Thomas Mayer , wrote in a research note. The tax increases and wage cuts are likely to be a further drag on growth this year, complicating the government’s efforts to reduce the deficit as percent of gross domestic product. Deutsche Bank forecasts a contraction of 4 percent in 2010, twice last year’s pace. The Finance Ministry yesterday said the forecast for a 0.3 percent contraction included in the January deficit-reduction plan, is too optimistic and now sees the economy shrinking at least 0.8 percent this year. Greece will announce final fourth-quarter GDP today after a preliminary report on Feb. 12 showed the economy contracted 2.6 percent in the three months through December from a year earlier. EU Pressure Investors and EU officials have ratcheted up pressure on Greece to do more to ensure it meets its deficit target of 8.7 percent of gross domestic product this year, from 12.7 percent in 2009, as the country sinks deeper into recession. Concerns about Greece’s ability to tame the budget gap prompted speculation that the country would need a bailout and could be forced to abandon the single currency. The euro has declined almost 5 percent this year as Greece’s financial woes raised questions about the strength of monetary union. Eurobank and National Bank of Greece SA may report their lowest quarterly profit in at least five years as loan losses mount during the economic slump. Eurobank, the country’s second- largest lender, may say today that fourth-quarter net income fell to 3.7 million euros, according to the average of six analysts surveyed by Bloomberg. Popularity Sliding Papandreou’s approval rating slipped more than 10 percentage points over the last two months as he unveiled the raft of budget measures, a poll showed on March 9. He still commands the support of a majority of Greeks, with 52 percent having a positive opinion of him, according to the survey by GPO pollsters for Mega Television. Almost 60 percent of those surveyed disapproved of the latest budget cuts and more than 65 percent said the measures were “unfair.” In a Kapa Research poll for To Vima newspaper on March 7, which also showed Papandreou with majority support, 86.9 percent said the measures would provoke social unrest. His socialist Pasok Party enjoys a 10-seat majority in parliament and was able to pass the latest budget measures in the legislature on March 5, two days after announcing the plan. “The protests, unrest and violence all this time are instigated by those who are attempting to preserve for their own benefit all the ills that resulted in the Greek people being beggars to international markets,” Dimitris Daskalopoulos , head of the Athens-based Federation of Greek industries, said in a speech yesterday. “Who are they calling on us to protest against and demand from? Is it maybe against ourselves?” To contact the reporter on this story: Maria Petrakis in Athens at mpetrakis@bloomberg.net ;
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Greece Paralyzed by Strikes as Unions Protest Against Plan to Cut Deficit
