January 25, 2016 / 4:43 PM / 2 years ago

Greek political leaders to clash over pension cutback plan on Tuesday

4 Min Read

Greek pensioners shout slogans during a demonstration against planned pension reforms in Athens, Greece, January 19, 2016.Alkis Konstantinidis

ATHENS (Reuters) - Greece launches debate on a contentious pension reform plan in parliament on Tuesday, the opening salvo of what may be the toughest test yet of Prime Minister Alexis Tsipras's staying power at the helm of Europe's most indebted nation.

Juggling a fragile majority of just three seats in parliament, Tsipras, elected a year ago, is likely to mount a staunch defense of his plans for a pensions system which could face collapse without radical cutbacks.

The intricacies of how to cut 1.8 billion euros ($1.95 billion) off the pension bill this year will not be addressed on Tuesday, though it will give Greek politicians an opportunity for political jousting in a highly fractious parliament.

But with farmers on the streets threatening mass blockades and nationwide walkouts scheduled for Feb. 4, Tsipras's government has been at pains to stress it is trying to rectify the shortcomings of previous governments.

"We have done everything possible to keep the present pension levels intact, and create a system based on equality and social justice," Tsipras told crowds of supporters during a rally marking a year in power on Sunday night.

The total annual pension bill is about 28.5 billion euros. Greeks' pension payments have already been reduced about a dozen times - about 30 percent on average since the country's financial crisis erupted in 2010.

Greek government officials say formal debate on pension reform is likely to take place in February. The leftist-led coalition has signaled it could soften some measures for sectors being hit hardest as it takes the pulse of public sentiment while awaiting approval of its plans from lenders.

But Greeks, fed up seeing their incomes shrink as the taxes pile up, fear that their future is bleak.

"This new pension reform plan is an Armageddon," Panos Papanikolaou, a neurosurgeon, told reporters outside the labor ministry during a protest by doctors on Monday.

Opposition Short Shrift

Opposition parties have promised to reject the reforms proposed by the leftist premier, who came to power pledging to end the belt-tightening mandated by international lenders but was forced to sign up to a third bailout in July.

"Society cannot withstand new taxes. Nor will it permit the demolition of the social security system and the pension cutbacks," the Socialist PASOK party said in a statement.

The conservative New Democracy party, which recent polls have suggested is marginally leading Syriza in polls, says it will vote against the cuts that it describes as the outgrowth of the government's policies.

"The government's plan, which has sparked all this social reaction, is the price Greeks must pay for its wrong decisions and failed policies," New Democracy spokesman George Koumoutsakos told Reuters. "We will reject it."

Pension reform is a key topic for the first review of Greece's third bailout, which its leftist-led coalition wants to conclude swiftly so that it can open talks on long-term debt relief.

Government officials have suggested their final draft of proposed reforms will be submitted to parliament after consultations with the European Union and International Monetary Fund mission reviewing Greece's bailout progress.

The creditors' technical teams arrived in Greece last week to collect fiscal data and information about the pension reform, but there was no fixed date for the return of the EU/IMF mission chiefs, known in Athens as "the quartet".

Government officials and a source close to the lenders said they were likely to return by Friday or next week depending on how much headway the technical teams make on the ground.

Last week, Tsipras held meetings with European Central Bank chief Mario Draghi and IMF Director Christine Lagarde at the annual World Economic Forum in Davos to discuss the review and underline Greece's will to conclude it.

Editing by Michele Kambas/Mark Heinrich

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