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Greece heads for standstill before austerity vote

LATEST NEWS ATHENS: Greece faces a crucial test this week, when much of the country is expected to be shut down by a 48-hour strike reaching a peak on Thursday as parliament votes on a sweeping package of austerity measures demanded by international lenders.

Greece’s two main unions, representing about half the four million-strong workforce, have promised one of the biggest strikes since the crisis began two years ago, hitting food and fuel supplies, disrupting transport and leaving hospitals run by skeleton staff.

Prime Minister George Papandreou, trailing badly in opinion polls, has defied the protests, pledging to push through a deeply unpopular package that includes tax rises, pay and pension cuts, job layoffs and changes to collective pay deals.

His four-seat majority is expected to hold up with the support of smaller opposition parties, but at least two members of the ruling PASOK party may oppose part of the bill when the vote is called, probably in two stages on Wednesday and Thursday.

With European Union leaders racing to prepare a comprehensive new bailout deal in time for a summit on Oct. 23, Finance Minister Evangelos Venizelos said this was the week “during which many things, maybe everything will be decided”.

Trapped in deep recession and strangled by a public debt equivalent to some 162 percent of gross domestic product, Greece has been shut out of bond markets and would run out of money within weeks without international support.

Many economists believe Athens can no longer avoid defaulting on its debt, but in a newspaper interview on Sunday, Papandreou said a default would be a “catastrophe” for Greece.

Inspectors from the EU and the International Monetary Fund were in Athens last week and have recommended releasing a vital 8 billion euro aid tranche to enable the government to keep paying its bills past November.

That will only provide temporary relief and they urged Papandreou’s struggling Socialist government to push ahead with further belt-tightening, on top of what are already the deepest cuts in Greece’s postwar history.

Papandreou was scheduled to meet President Karolos Papoulias at 0930 GMT and hold an informal cabinet meeting at 1330 GMT to brief them on the Greek debt talks.

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