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Greece needs 'time & serenity' for reforms

George Papandreou - 'Everything must change'
George Papandreou - 'Everything must change'

Greece needs ‘time and serenity’ to carry out profound reforms, Prime Minister George Papandreou has said.

Mr Papandreou added that ‘everything must change’ in order to make its debt-shaken economy viable again.

However, ratings agency Standard & Poor's downgraded Greece's sovereign debt to junk status.

The downgrade means certain investors will no longer be allowed to buy Greek debt and could also curb Greece's access to vital European Central Bank funds.

Meanwhile, striking public transport workers halted Athens' buses, trams and metro for six hours today in protest against the austerity measures being introduced to tackle the country's debt crisis.

A new opinion poll indicated 61% of Greeks were opposed to the government's decision to ask for EU/IMF aid, a measure that is likely to entail even tougher cuts in public spending.

Yesterday, striking dockworkers blocked hundreds of tourists from returning to their cruise ship.

The public outcry has unnerved some investors, who fear reform efforts may take a hit if it grows into unrest on the lines of the riots that paralysed Athens for weeks in December 2008.

The government has said it will increase the average effective retirement age to 63, from 61 now, but Greek media say the IMF wants a bigger increase.

The socialist administration has already cut public pay and raised taxes, moves that have already sparked strikes and demonstrations over the past month.

The public sector union ADEDY was due to stage a protest march in Athens this afternoon, and the umbrella private sector union GSEE is expected to decide soon on a strike in early May.

According to the opinion poll, published late yesterday, 67.4% of the 1,400 people surveyed thought the current situation could lead to social unrest, against 30.4% who believed it was probably or totally unlikely.

Only 31.9% thought the PASOK government should stay in power to solve the crisis, while 31% were in favour of a national unity government between PASOK, New Democracy and a far right party, according to the poll by Greek Public Opinion for Mega TV.

Another 27% liked neither option and 10% had no answer.

Nevertheless, 50.8% approved of Mr Papandreou's performance as prime minister.

The premium investors demand to buy Greek government bonds rather than eurozone benchmark German Bunds hit 687 basis points today after a German budgetary expert suggested aid to Greece could still be blocked.

It was the highest level since Greece joined the single currency.

Concern over aid

It comes as a survey suggests that 57% of Germans think giving aid to Greece would be a ‘bad decision,’ underlining the level of public opposition in Europe's biggest economy.

Only 33% are in favour, the poll by Dimap commissioned by Germany's Die Welt daily and French television news channel France 24 showed. The survey of 1,009 people was carried out in mid-April.

After months of fighting to finance its national debt, Greece formally applied on Friday for a bailout from its eurozone partners and the IMF worth up to €45bn.

But German Chancellor Angela Merkel, with a key state election to fight on 9 May and public opposition to a bailout strong, has insisted that Athens first demonstrate how it plans to get its public finances in order.

As Europe's biggest economy, Germany would be the biggest contributor to any aid, providing around €8.4bn in a €30bn package from euro zone countries.

Influential voices in the media also took a sharp line in opposing a bailout for Greece, accusing the state of profligate spending and cooking the books.

Bild, the mass-circulation German daily newspaper, carried the front-page headline: ‘Why should we pay for Greeks' luxury pensions?’

The Greek government ‘tricked, camouflaged and fooled for years in a way that would make the gods on Olympus blush ... With all respect to the world's oldest democracy, if you lie once, no one will believe you. Particularly when it's about money.’

The paper sent its reporter to Athens in a stunt to hand out drachmas, Greece's currency before it joined the euro in 2001.

‘The old notes were virtually ripped out of his hands,’ Bild said.
Others attacked Chancellor Merkel's strategy of talking tough and then gradually relenting.

‘Merkel drives the markets crazy,’ said the Financial Times Deutschland, adding that her emergency statement yesterday where she sought to calm sentiment had fallen on deaf ears.

‘The big bluff failed - the players blinked and sweated, wobbled and negotiated, and now the gamblers want to see the cards,’ said the Tagesspiegel daily.