Greece facing 'uncontrolled chaos' without debt deal: PM

[1]

Greece's prime minister on Friday warned his crumbling coalition that the country faces ‘uncontrolled chaos’ without a debt deal while a two-day strike and protests in Athens left at least ten injured.

"A disorderly default would plunge our country in a disastrous adventure," Lucas Papademos told the cabinet after six members of the government, including a minister, resigned in protests against new austerity cuts demanded by Greece's EU-IMF creditors.

"It would create conditions of uncontrolled economic chaos and social explosion...sooner or later, (Greece) would be led out of the euro," he warned.

"This is an hour of historic responsibility," the PM added.

Greece was explicitly told by its eurozone partners this week that it must agree to austerity measures in order to secure the release of further loans under the $171 billion bailout pending since October.

The rescue fund is essential to stave off bankruptcy on March 20, when Athens must repay nearly 14.5 billion euros ($19 billion) in maturing debt.

The belt-tightening measures, which have sparked protests and two general strikes, will be taken to a parliament vote on Sunday.

The three texts put to a vote will include measures to recapitalise Greek banks, an authorisation for Papademos and Finance Minister Venizelos to sign the eurozone bailout, and a bond swap with private creditors designed to wipe out around 100 billion euros from Greece's 350-billion-euro debt, semi-state agency ANA said.

Details on the austerity measures will be included in a follow-up law tabled in the next two weeks, the agency said.

Earlier on Friday, the far-right LAOS party that was part of the coalition said it would not support further austerity cuts demanded by the EU, the IMF and the European Central Bank, and its four members in government later submitted their resignations.

They were followed by the assistant foreign minister for European affairs, a socialist who accused the EU of ‘fixation’ on a labour rights overhaul that contravened the Treaty of Lisbon.

The EU and IMF have told Greece to revise labour agreements, slashing minimum wages and facilitating layoffs even though over a million people are already unemployed in Greece, or over 20 percent of the workforce.

"This fixation directly violates the Treaty of Lisbon which recognises social cohesion, collective bargaining and the autonomy of social partners as basic values," socialist Mariliza Xenogiannakopoulou said.

Another socialist, a deputy labour minister, resigned on Thursday.

The government intends to appoint replacements after the measures are approved by parliament on Sunday, state television NET said.

At least five socialist and conservative deputies have declared their intention to oppose the cuts on Sunday and far-right leader George Karatzaferis said his 16 lawmakers would do likewise.

"We are not going to vote," LAOS leader George Karatzaferis told a news conference, adding: "Humiliation was imposed on us. I do not tolerate this."

In principle, the two senor coalition partners, socialist Pasok and conservative New Democracy, still have enough support to ensure the passage of the proposed measures.

Meanwhile, clashes erupted on the sidelines of union demonstrations against 15,000 civil service layoffs and cuts in wages and pensions.

Youths in hoods and motorcycle helmets broke up masonry around central Syntagma Square and haul stones at police, who responded with bursts of tear gas.

At least ten people were injured including eight police officers and six arrests were made, a police source said.

Eurozone finance ministers on Thursday delayed a decision on a new bailout, giving Greek officials less than a week to meet tough conditions in exchange for fresh aid.

The ministers want Greek lawmakers to formally approve the measures, which include additional structural spending cuts of 325 million euros for 2012.

They also want a written pledge from coalition leaders that they will implement the reforms, Eurogroup chief Jean-Claude Juncker said in Brussels.

If those conditions are met, the Eurogroup would meet again on Wednesday, he said.