Onrust in Griekenland neemt toe (en)

Met dank overgenomen van EUobserver (EUOBSERVER) i, gepubliceerd op vrijdag 5 maart 2010, 17:40.

EUOBSERVER / BRUSSELS - Clashes broke out in Athens on Friday (5 March) as the Greek parliament debated and approved the fresh austerity measures announced by the government on Wednesday.

Workers around the country downed tools in protest against the €4.8 billion in spending cuts and tax hikes, while over 7,000 gathered in a tense protest outside the country's legislature, news media report.

Police responded to skimishes with tear gas, and Greece's two main unions announced plans to hold a fresh 24-hour general strike on 11 March.

The country's prime minister, George Papandreou, meanwhile embarked on a European tour as he attempts to drum up support for a Greek bail-out package.

EU leaders pledged their support for Greece at an informal summit in Brussels last month, but have subsequently been reluctant to release further details, a step Athens argues would bring down its borrowing costs.

After a meeting with Mr Papandreou on Friday, Luxembourgish Prime Minister Jean-Claude Juncker i - who chairs the monthly meetings of euro area finance ministers - said a Greek rescue plan was no longer necessary in his opinion.

"The commitments taken by the Greek government are clearly paving the way towards an exit" from its debt and deficit crisis, said Mr Juncker. Athens successfully raised €5 billion with a 10-year bond issuance on Thursday, but was forced to offer investors a punishingly high yield.

German Chancellor Angela Merkel i also continued to play hardball with the Greek administration on Friday, hours before she was scheduled to meet with Mr Papandreou in Berlin.

At a television conference in Munich, Ms Merkel said Greece's successful bond issuance "gives us optimism" that things will go well in the months ahead, clearly indicating she did not plan to pledge financial aid at the meeting.

German economy minister Rainer Bruederle was less diplomatic earlier in the day when he said the government "does not intend to give a cent" to Greece.

Many EU leaders are reluctant to set a new precedent of bailing out struggling governments, while domestic opposition to a Greek support package is high in Germany, the country likely to be the main contributor.

"Sell your islands, you bankrupt Greeks! And sell the Acropolis too!" - ran the headline of Germany's mass selling Bild newspaper on Thursday, citing a senior member of Ms Merkel's Christian Democrat party as putting the idea forward.

The cat-and-mouse game currently being played out in the Europe has seen Athens declare its willingness to turn to the International Monetary Fund if EU solidarity is not forthcoming, a potential embarrassment for an EU establishment that is keen to solve its own difficulties with internal solutions.

Credit Default Swaps

In related news on Friday, the European Commission held "technical talks" with banks, investors and regulators as it takes a closer look into the potential threats posed by derivative products such as credit default swaps.

Athens has accused speculators of using the swaps to make large bets against the Greek economy, driving up its borrowing costs and weakening the euro. The country's centre-left Pasok administration delayed last week's bond issuance until this Thursday amid CDS turmoil

CDSs function like an insurance contract for debt investors. If a borrower, such as the Greek government, defaults on its debt obligations, the seller of the default swap pays compensation to the purchaser.

Swap holders are not obliged to hold the underlying asset that is being "insured" however, a situation which regulators say promotes destabilising betting. The commission is set to come forward with a directive on derivatives later this year.


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