Tensions simmer as Greece readies pensions reform

Hundreds of protesters rallied in Athens on Sunday as the government sought to rein in social tensions while pressing ahead with drastic austerity measures aimed at avoiding a debt default.

"I feel angry that my right to dream has been denied and it's mainly the government's fault," said Penny, a 19-year-old student demonstrating on a square in front of the parliament building -- the scene of riots last week.

Greece is burdened by giant debts and a recession-mired economy and has appealed to the European Union and the International Monetary Fund for help as it ran out of options to borrow on the markets amid steeply rising costs.

The EU and the IMF have approved an emergency loan package of 110 billion euros (141 billion dollars) to bail out Greece but have demanded strict budget cuts in return, and some experts are warning the money may not be enough.

People attend a protest against the government's austerity measures as they stand outside the Greek Parliament in the center of Athens.

The IMF's executive board on Sunday gave final approval to its three-year 30-billion-euro portion of the loan package.

The government has called for consultations on Monday with all of Greece's main political movements to be hosted by President Carolos Papoulias but two far-left parties that have helped lead protests are boycotting the talks.

The cabinet is also set to give its approval to a radical plan to overhaul the pensions system, raising the retirement age for women to 65 and increasing the number of years that workers have to pay retirement contributions.

Fears of a Greek default have put a focus on the weakness of other European economies such as Portugal and Spain, hitting the euro.

EU finance chiefs met in Brussels on Sunday in a bid to stop the plunge in investor confidence linked to the Greek crisis from spreading to other eurozone nations as observers nervously awaited market reactions on Monday.

Following days of Greece-linked mayhem on world financial markets last week, US President Barack Obama also held separate phone talks with French President Nicolas Sarkozy and German Chancellor Angela Merkel on the crisis.

In an interview with To Vima daily issued on Sunday, Greek Finance Minister George Papaconstantinou warned of the catastrophic consequences if Greece were to default on its debts -- something the government is racing to avoid.

"The banking system would stop operating and businesses and households would automatically lose access to bank funds," Papaconstantinou said.

"We would enter an even deeper recession of around 10 percent, maybe more, which we would not exit for years," he added.

Violent protests in Athens, which led to the death of three bank employees last week after their office was firebombed, have added to the pressure on the government.

The country's main union that represents around a million private employees has pledged to mobilise to prevent the pension reform from passing.

But a poll showed Greeks grudgingly accepting the need for cuts.

The survey in To Vima daily showed that 55.2 percent of respondents would accept austerity measures, while 56.3 percent prefer wage cuts to national bankruptcy and 71.3 want squabbling Greek political parties to cooperate.

source AFP

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