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Anger, Tension Rise In Debt-Ridden Greece


NPR's Sylvia Poggioli joins us from Athens. Hi, Sylvia.


LYDEN: The austerity measures are so unpopular that the prime minister faced a rebellion within his own Socialist Party ranks. What changes will the government reshuffle bring about?

POGGIOLI: And today here in Athens, opening a three-day parliamentary debate, Papandreou called for a referendum on changes to the political system - including the constitution - that would make it easier to have more flexibility in the labor market. He blamed Greece's bloated public sector for contributing to the current crisis, and he said that a constitutional change will also help prosecute corrupt officials.

LYDEN: How likely is it that this new finance minister can actually get softer conditions from his European partners?

POGGIOLI: A poll out today shows that nearly half of Greek voters want parliament to reject a new round of budget cutbacks in return for a second bailout of $170 billion, and over two-thirds support the ongoing protests.

LYDEN: Sylvia, just quickly remind us of some of the measures the government has implemented.

POGGIOLI: So Papandreou's government is facing, at the same time, intense demands from public opinion to let up on the austerity measures, and strong pressure from the EU and IMF to apply even more radical reforms.

LYDEN: Sylvia, how can such a weak government fulfill international demands?

POGGIOLI: Well, many analysts believe that even the new government can't last long, and they predict there will be early elections within a few months. But you know, a long period of paralysis could cause further panic in the markets and yet paradoxically, that could prove to be to Greece's advantage because the specter hanging over Europe - and beyond - is the terror that Greece will default. A Greek default would be devastating for the banks that hold Greek debt - in particular, French and German banks. There would then be the risk of contagion spreading to Portugal, Spain, and even Italy and Belgium.

LYDEN: NPR's Sylvia Poggioli, speaking with us from Athens. Thanks very much.

POGGIOLI: Thank you, Jacki. Transcript provided by NPR, Copyright NPR.