Democratic Left party, a partner in conservative-led alliance, pledged it would not support the austerity bill
Furious Greek unions have vowed to stage "the mother of all strikes" as the country's parliament prepares to vote on new austerity measures, the condition for further rescue funds that will keep bankruptcy at bay and, in so doing, secure continued membership of the euro.
The fresh round of cutbacks and tax increases – the fourth such package since the outbreak of Europe's debt crisis in Athens three years ago – is likely to be passed, but not without a fight, as public and sector employees walk off the job on Tuesday in a 48-hour showdown with prime minister Antonis Samaras's fragile coalition.
"These measures may be voted through, but they cannot be enforced because the tolerance levels of Greeks have really passed their limits," said Panos Skourletis, spokesman of the main opposition Syriza party.
"The government does not have the political legitimacy to pass policies which it promised it would renegotiate during the election campaign [in June] and which it knows will lead to the annihilation of our nation. The only way out is fresh elections here and now."
With cuts amounting to more than 5% of GDP, the €13.5bn package has stirred ferocious passions, both in the governing coalition where politicians have spent almost five months negotiating the reforms with international creditors at the EU and IMF, and on the street where anti-bailout forces have pledged to do "whatever it takes" to stop the implementation of measures that will undoubtedly exacerbate the debt-choked country's economic freefall.
Indicative of the heightened political tensions, the small Democratic Left party, a junior partner in Athens' conservative-led alliance, pledged it would not support the austerity bill, which foresees the retirement age being increased from 65 to 67, controversial wage and pension cuts and a radical overhaul of the labour market – all in return for a crucial €31.5bn cash injection to keep the moribund Greek economy afloat.
"We will abstain from voting in favour of the austerity programme because we disagree fully with the labour reforms that are also included in the package," said Dimitris Hadzisokratis, the party's economics chief.
With Greece mired in its worst recession since the second world war amid record levels of poverty and unemployment, the party has argued that further cuts to wages and severance payments will devastate a workforce that has already borne the brunt of the crisis. But Hadzisokratis rejected mounting rumours that the leftist party was considering quitting the coalition, predicting that far from being explosive the social backlash to the measures would be limited. "My own personal feeling is that social reaction will not correspond to the weight of the measures and will be much less than anticipated because people can see there is no alternative," he said.
Addressing his own wavering MPs, Samaras insisted that the choice was stark. Either the measures were passed, or bankruptcy and euro exit beckoned. "The problem is not whether this measure or the other is adopted … [but] what would happen if the measures did not pass, if the loan agreement was not finalised," he said conceding that ordinary wage earners had already lost 35% of their income over the past two years. "If we were forced to leave the euro now, we would lose at least twice that amount within a few weeks. Our standard of living would fall by about 80%," emphasing that the spending cuts would be the "very last" to be imposed on a nation that has come ever closer to breaking point.
But unions beg to differ. With over a quarter of the country's entire workforce out of work and extremism rising on left and right, many fear the package will prove to be the tipping point for Greeks.
Increasingly MPs in the government's other party, the once mighty socialist Pasok, have also revolted with as many as seven deputies refusing to back the measures. Politicians have argued that further belt-tightening will be counter-productive when, far from being tamed, Greece's monumental debt load is projected to hit a record 192% of GDP in 2014 – despite private creditors accepting a write-down in the value of Greek bonds in March.
The country's economy is expected to contract for a sixth straight year in 2013 with national outlay estimated to drop by 4.2% – bringing total losses since the crisis erupted to a whopping 25% of GDP.
"Everyone knows that our debt is totally unsustainable and with that in mind it has made voting for these measures seem even more pointless," confided one socialist deputy.
Dissent in Pasok means that the government is unlikely to pass the measures with anything more than a slim majority which will add to the turmoil in Greece as the coalition's viability comes under ever greater question.
"Elections are inevitable," said Nikos Filis, editor of the Avgi, paper widely aligned with the views of the main opposition Syriza party. "It is one thing to hear about measures, another to have them applied. The more these are enforced, the greater the reaction will be and the greater the loss to the government's authority."
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