Economy is dividing ND

Level of public funding and crisis handouts at heart of ministers’ disagreement

Deep divisions appeared within the government yesterday due to differences between ministers over the direction that New Democracy’s economic policy should follow in the wake of the global financial crisis.

The dispute centers on a difference of opinion between two of the conservative government’s heavyweights – Economy and Finance Minister Giorgos Alogoskoufis and Public Works Minister Giorgos Souflias – over public spending.

Souflias wants the budget to allow his department to carry on with major public works. Alogoskoufis responded yesterday by suggesting that a 28-billion euro aid package for banks would help ensure that projects which involve the public sector would still go ahead as normal.

Souflias has the support of several other ministers.

Alogoskoufis, who is under pressure from critics within the party, also announced plans to introduce certain stipulations such as capping salaries of senior bank managers and scrapping bonuses as part of the support package.

However, many within ND, such as party secretary Yiannis Tragakis, are demanding that the government do more to support low-income earners, pensioners and the unemployed in order to boost its waning popularity.

However, government sources said yesterday that there are unlikely to be any major handouts, which seemed to be confirmed by Prime Minister Costas Karamanlis who urged caution.

“It is not clear how long the economic crisis that is troubling the planet will last or how intense it will be,” he said at the start of a four-day international anti-corruption conference in Athens.

PASOK leader George Papandreou put pressure on the government to come up with some handouts, arguing that a heating subsidy as well as cash payments for the poor should be introduced.

Meanwhile, another concern for the government is that the parliamentary committee charged with investigating the Vatopedi property scandal convened for the first time yesterday. It has 45 days to decide whether any politicians were involved in the allegedly corrupt deal.