Greek farmers scale back protest, easing pressure on crisis-plagued government

Greek farmers scale back protest

ATHENS, Greece — Prime Minister George Papandreou got a measure of relief Friday in his fight to curb Greece’s runaway deficit, as protesting farmers scaled back highway blockades in opposition to the government’s austerity measures.

The prospect of strikes and protests have raised fears Papandreou won’t be able to push through an austerity plan aimed at dousing the country’s financial crisis, which has undermined the euro because markets fear Greece may default on its debts.

The worries have spread to other countries such as Portugal, where there is also resistance to cutbacks aimed at dousing a spreading European government debt crisis. Stock markets across Europe have sagged as a result.

Papandreou reportedly told Greek journalists traveling with him on a visit to India, where he is attending a sustainable development conference, that the euro had come under a sustained speculative attack that was targeting Greece, Spain and Portugal. He said speculators would have focused on another weak link in the 16-nation eurozone if it weren’t for Greece, Greek media traveling with him reported.

“The problem is European and international and we must take coordinated action with solidarity on this issue,” Greek media quoted Papandreou as saying Friday.

Farmers began their campaign in mid-January to demand higher and faster subsidy payments, but began removing blockades in the early afternoon despite the government’s adamant refusal to increase any payments to support crop prices.

Tax and customs officials were on the second day of a 48-hour strike that began Thursday, while civil servants will walk off the job next Wednesday.

Protesting farmers at the Greek-Bulgarian border have refused to comply with their colleagues decision and are vowing to maintain their tractor blockade under their demands are met, disrupting the transport of goods to and from Bulgaria.

Greece is under intense pressure from markets and other European Union governments to get a grip on its deficit, which stands at 12.7 percent of economic output for 2009 — more than four times the 3 percent limit for countries using the shared euro currency. Papandreou’s Socialist government has pledged to reduce it to 2 percent in 2013, and has announced an austerity program that includes salary freezes for civil servants and higher taxes.

The program has won the backing of the European Union, although the EU will be keeping a close eye on Greece’s figures to ensure it sticks to the plan.

Government spokesman Giorgos Petalotis stressed that the country’s problems could not be fixed overnight, and that the measures need time to show results.

“Nobody has the illusion that we will announce a measure or take a decision and the next day the problem with the markets or some speculators will be solved,” he said.

A Greek default would be a serious blow to the shared euro currency, but Greece and the EU have insisted that will not happen and that Athens can fix its problem with a program of sharp cutbacks and efforts to make its economy more competitive. Greece insists it will not need a bailout from other EU countries, and that it does not need to turn to the International Monetary Fund.

“There is no thought at all of Greece turning to the IMF,” Deputy Foreign Minister Dimitris Droutsas said in New York late Thursday after a meeting at the United Nations. “Greece is a member of the eurozone. Greece has presented a very credible and serious program and proposals for necessary measures to stabilize the Greek economy.”

The IMF’s chief, Dominique Strauss-Kahn, told the French radio station RTL Thursday that the multinational lending agency was ready to help Greece if asked to, but that he did not think the country was heading for bankruptcy.

“I have a mission on the ground to provide technical advice requested by the Greek government. And if we’re asked to intervene, we will,” he said, but added “I understand that the Europeans don’t want this for the moment.”

Greece insists it can pull itself out of the crisis.

Replying to a question in Parliament Friday, Finance Minister George Papaconstantinou said the country would not ask for a centrally issued European bond.

“Greece, today, cannot raise the banner of the eurobond, for a very simple practical reason. If we did this, it would send a message that we cannot see the situation through by ourselves. We can see this through ourselves,” he said.

“Greece is doing whatever is necessary to reduce the deficit and bring the national debt under control. Greece has a very serious growth and stability program which was given the green light by the European commission several days ago.”

Greece’s stock market tumbled further Friday, amid a global run on stock markets following concerns over U.S. jobless figures that saw the Dow Jones industrial average fall 2.6 percent.

The Athens Stock Exchange closed down 3.73 percent, while the spreads on Greek government bonds over the equivalent German bond — a key indicator of market confidence — fell slightly to 349.9 basis points after rising to above 365 earlier in the day, which had indicated slightly less confidence in Greek finances.

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Associated Press writer Derek Gatopoulos in Athens contributed to this report.