Government faces first practical test

The fragile unity of Prime Minister Lucas Papademos?s government faces its first practical test on Wednesday when conservative New Democracy, the second-largest party in the tripartite coalition, is expected to challenge a crucial piece of legislation aimed at making significant savings by cutting auxiliary pensions and merging the funds that pay these pensions.

Papademos is to chair a cabinet meeting with the aim of gaining approval for a bill drafted by Labor and Social Insurance Minister Giorgos Koutroumanis, who has stressed that the painful changes are part of a general overhaul Greece has pledged its foreign creditors and are the only way of saving indebted social security funds from collapse.

According to sources though, ministers affiliated with ND are expected to come to the meeting ready to fight these proposals as measures that would further burden austerity-weary Greeks and possibly to suggest that — if the funds are such a big problem — Greece should request a larger loan from its creditors. ND ministers are also likely to argue that cuts to auxiliary pensions have not been agreed with creditors.

Government sources countered on Tuesday that Greece?s original pact with creditors does foresee changes to auxiliary pensions.

On Tuesday, ND?s shadow labor minister, Nikolaos Nikolopoulos, set the ball rolling, accusing Koutroumanis of going against Papademos?s pledge not to introduce any more austerity. Nikolopoulos also accused the previous socialist PASOK administration of ?pillaging? the coffers of auxiliary pension funds.

Meanwhile, dissent is said to be growing within the ranks of PASOK following a decision to put off Wednesday?s scheduled session of the political council until next Tuesday.

Potential challengers to current PASOK leader and former Premier George Papandreou continued to speak out. Late on Monday, in an interview with Skai TV, Development Minister Michalis Chrysochoidis criticized the achievements of PASOK in its last two-year stint, a clear dig at Papandreou.

On Tuesday Finance Minister Evangelos Venizelos gave a speech about how Greece can exit the crisis. Meanwhile Health Minister Andreas Loverdos called for the process of electing a new PASOK leader to be ?swift and clean? in a comment that was widely interpreted as suggesting that ministers should not be made to quit their posts before entering the contest.

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