Cabinet split over economic measures

As the government finalizes the provisions of its tax and income policy, top ministers and aides are reportedly divided over the austerity of the measures it will include, with some anxious to allay the European Commission and global markets, while others fear the social unrest deep-reaching reforms may provoke. According to sources, the ministers attending an emergency meeting at the official residence of Prime Minister George Papandreou late on Sunday night fell into two camps. On the one hand, Finance Minister Giorgos Papaconstantinou, Interior Minister Yiannis Ragousis and experienced PASOK cadre Petros Efthymiou, a former minister, called on Papandreou to herald exceptionally strict tax and income provisions, possibly including a rise in fuel tax, ahead of the premier’s scheduled visit to Brussels for a European Union summit on February 11. According to this group, tough measures are vital if Greece is to send a clear message to Brussels that it is serious about plugging a gaping deficit and reassuring the markets of its ability to bounce back from the brink of bankruptcy. On the other hand, a group of equally experienced and influential ministers – including Deputy Prime Minister Theodoros Pangalos, Economy Minister Louka Katseli and Christos Papoutsis, PASOK’s parliamentary secretary – reportedly advised Papandreou against the imposition of «socially unfair» measures, firstly because they might not be necessary, and secondly because these additional measures in themselves would not be instrumental in swinging the markets one way or the other. Pangalos sought to strike a firm but diplomatic stance. «We should declare war but on those who have gotten away with not paying all these years, not on the lower income classes,» he said. The debate, which continued yesterday among top-ranking government cadres, was sparked by reports of plans in Brussels to ask Greece for a so-called «Plan B» – to feature additional reforms – if the government fails to implement the provisions set out in its crisis plan. According to sources, the government would be expected to submit this Plan B by March 16 or risk handing over the responsibility for financial decision-making to Brussels.

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