Greek PM promises ‘tough medicine’

GREECE

Greek Prime Minister Costas Karamanlis has kicked off his campaign to win against the odds in a October 4 snap election by promising painful spending cuts, in the teeth of union opposition.

In an annual economic keynote speech, the outgoing conservative leader vowed that if he won his third mandate in almost six years, he would freeze public sector pay and hirings and continue selling state firms to cut public debt.

“These measures will be implemented, no matter how many groups oppose them,” Karamanlis said at the opening of the Thessaloniki Trade Fair. Greek prime ministers’ annual speeches in Thessaloniki usually focus on social handouts.

The speech was preceded by angry labour union protests, with more than 10,000 people gathering on the streets of Greece’s second biggest city to oppose the government’s economic policy. The protests were largely peaceful.

“Tens of thousands of workers protested, seeking wage increases and the reversal of privatisations,” the main labour union GSEE said in a statement.

Plagued by scandals and Greece’s first economic stagnation in 16 years, Karamanlis earlier this week called an election mid-way through his second term, so his New Democracy party could take tough measures to save the slumping economy.

The main socialist PASOK opposition has a lead of more than 6 percentage points in the polls over New Democracy, which has lost support amid rising unemployment and tight credit for businesses.

Fair exhibitor Symeon Gazes, who builds prefabricated homes, said business had dropped by half since the crisis. “Our situation is dramatic, there is a lot of disappointment with the government,” he said.

A string of scandals, Greece’s worst riots in decades and forest fires near Athens last month dealt a further blow to Karamanlis, who swept to power in 2004 and was narrowly re-elected in 2007 on promises to fight corruption and make Greece’s bloated government more efficient.

Karamanlis, 52, sold off state companies such as flag-carrier Olympic Airlines and raised indirect taxes to try to narrow the country’s widening budget deficit and debt, which both far exceed euro area ceilings.

Karamanlis on Saturday also vowed to continue privatisations if re-elected, focusing on Greece’s No2 water utility Thessaloniki Water, nickel producer Larco, natural gas monopoly DEPA and the Mont Parnes casino near Athens.

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