PM attempts to dispel doubt over bailout, default

Prime Minister Lucas Papademos told his Cabinet on Friday that anyone who objects to the terms of Greece?s new bailout, which the premier said was the only viable course for the country to follow, would be removed from the government.

Papademos called his ministers together in the wake of six Cabinet resignations over the last 25 hours, which added to the tension caused by the eurozone finance minister?s decision on Thursday to ask for more guarantees from Greece before approving a further 130 billion euros in loans.

Speaking just a few hours after the leader of Popular Orthodox Rally (LAOS) Giorgos Karatzaferis said his party would not vote in favour of new loan agreement because of the tough austerity measures contained in the package, Papademos said that those who did not support the deal would have to quit their posts.

?It goes without saying that whoever disagrees and does not vote for the new program cannot stay in the government,? he said.

Papademos also made it clear that declaring bankruptcy was not an option for Greece. He argued that those who thought it might be better for Greece to default on its debts were ?seriously misguided? or guilty of ?demagoguery?.

“We cannot allow the country to go bankrupt,? he said. Papademos said that a default would «create conditions of uncontrolled economic chaos and a social explosion.»

“The state would be unable to pay wages and pensions and cover basic operational costs such as those of hospitals and schools.» It would make imports of basic goods such as medicines and fuel problematic and that businesses would close down en masse, he added. «The living standard of Greeks would collapse and the country would be dragged into a spiral of recession, instability, umemployment and misery,» he said. «All these developments would lead, sooner or later, to Greece’s exit from the eurozone.”

?The priority now is to do whatever it takes to approve the new economic program and move forward with the new loan agreement,» the premier continued.»

He added that the new economic program was the product of tough negotiation with creditors and would eventually bring the country back to growth.

Papademos said it was time for the cabinet to show ?historic responsibility.

?The endurance of the government is being tested and it is clear that not everyone can endure this burden,? he said in an apparent reference to the two ministers and four deputy ministers who have resigned over the past two days.

The premier referred to the two party leaders supporting the government, a clear nod to the withdrawal of Karatzaferis earlier in the day and the subsequent resignation of the party leader’s four cabinet ministers.

Unconfirmed reports claimed that the vote on the new loan agreement would take place on Monday rather than Sunday and that a Cabinet reshuffle would be held on the same day.