Protesters hold a banner which read in Greek 'Revolt, Hands off the 14th Salary' outside the entrance of the Greek financial ministry in central Athens, Thursday, March 4, 2010.
Greece launched a critical 10-year bond issue on Thursday, a key test of its ability to raise funds to pay off expiring debts — and dig out of a financial crisis that has shaken the European Union.
The bond was already oversubscribed — meaning more takers than there were bonds available — within an hour of the book opening, with euro7 billion ($9.5 billion) in offers received. The government was seeking a maximum of euro5 billion ($6.8 billion), said the chief of Greece's debt management agency, Petros Christodoulou.
The sale is a key test of Greece's ability to raise money to pay off expiring bonds and avoid the risk of default. The announcement of the issue comes a day after debt-ridden Greece detailed a whole new round of painful austerity measures, including salary cuts for civil servants, pension freezes and tax hikes on cigarettes, alcohol, luxury goods and gems.
Labor unions fiercely oppose the measures, and have announced protests for Friday, when parliament is set to approve draft legislation on the new austerity plan that aims at euro4.8 billion ($6.55 billion) in budget savings this year.
The measures were intended to show markets that the government is serious about getting spending under control and will have the money to pay its debts.
Greece has to borrow some euro54 billion ($7.4 billion) through sovereign debt issues this year, and has so far raised around euro13 billion ($18 billion), including treasury bill sales. It has around euro20 billion ($27 billion) worth of debt maturing in April and May. But low market confidence in the country has translated into extremely high borrowing costs for Athens, and the government has been seeking for a way to borrow at more reasonable rates.
Greece is pressing its European Union partners for stronger support in return for its new harsh austerity plan, saying it needed a vote of confidence that would calm the markets. Prime Minister George Papandreou is to meet with German Chancellor Angela Merkel whose country has the 16-nation eurozone's biggest economy, in Berlin Friday, and with French President Nicolas Sarkozy in Paris Sunday.
The European Union has made a vague expression of support, and there has been market speculation that Germany and France might extend help in the form of state-owned banks guaranteeing Greek bonds. Many analysts think the EU would step in to stop a Greek default and avoid the severe blow it would cause to the euro currency and to the balance sheets of European banks who hold Greek bonds.
"What we expect from our EU partners and above all Germany — because Germany's voice is a particularly important one in this context — is a clear expression of solidarity and confidence" in the Greek government and its new austerity plan, Deputy Foreign Minister Dimitris Droutsas told Germany's ARD television.
Droutsas stressed that "the Greek government at no point demanded or asked for direct financial support from its EU partners or, naturally, from Germany."
"We are of the opinion that we can master this crisis alone," he said. "What we need is a really strong expression of solidarity."
Government spokesman George Petalotis said there was no bailout deal with the EU. What Athens was looking for, he said, was "a clear and explicit statement ... that Greece genuinely is a solvent country on which everyone can rely — so risks will be lowered on international markets and we can borrow money."
"That is enough for us," he said.
Germany has stressed repeatedly that Greece bears the main responsibility for overcoming its debt crisis. Merkel welcomed the deeper austerity measures Wednesday, but stressed that her meeting with Papandreou would "not be about pledges of aid."
Greece's two largest labor unions are organizing work stoppages and a protest rally outside parliament Friday, as lawmakers vote on the austerity plan.
The ADEDY umbrella union representing civil servants, who will suffer most from the measures, decided Thursday to walk off the job from noon onward, shutting down public services and grounding flights for four hours. The private sector umbrella union, GSEE, also called for a three-hour walkout from noon, and the two unions will hold a demonstration in Athens.
A Communist-affiliated labor union has also called a general strike and demonstration for Friday. That union occupied the finance ministry building in central Athens early Thursday, hanging a massive banner from the roof, and was planning a demonstration Thursday evening.
France's New Anti-Capitalist Party voiced support for the Greek union protests, calling for coordinated resistance in Europe.
"The European Commission is using the Greek crisis to get the idea accepted that Europe must impose a policy which hits at the social rights of workers," said a statement from the small party, whose leader Olivier Besancenot won around 4 percent in the first round of France's 2007 presidential elections.