Greek govt set to win confidence vote despite sniping

A national unity government aiming to save Greece from bankruptcy was set to win a parliamentary vote of confidence on Wednesday but the leader of the conservative faction gave only qualified support.

Prime Minister Lucas Papademos has the backing of three in four Greeks, but the need to implement painful tax rises and spending cuts to secure fresh loans will sorely test support for the technocrat's quarrelsome three-party coalition.

Highlighting the challenges facing Papademos, the main utility union briefly cut off power to the Health Ministry building on Wednesday to protest against a property tax the government is trying to collect through electricity bills.

The leader of the New Democracy conservatives, Antonis Samaras, said he would back the coalition to unblock a sixth tranche of EU and IMF aid worth 8 billion euros needed to meet next month's debt repayments.

But he also repeated his demand for pro-growth policies to revive an economy shattered by four years of recession and reaffirmed his refusal to sign a written pledge demanded by the European Commission to meet the terms of Greece's bailout.

"If there is something that we all agree on, of course we will vote for it. But we are making clear we won't approve anything we disagree with," Samaras told parliament.

"Those who try to prolong the mandate and role (of this government) ... undermine this government, they do not help it. Those who try to avoid elections by the end of the (first) quarter do not help the new prime minister," he added.

The confidence vote in Greece's new government -- which unites Samaras's New Democracy, the Socialists of fallen prime minister George Papandreou and the far-right LAOS party -- is expected around 1600 GMT.

As well as the sixth tranche, Papademos -- a former vice president of the ECB with no political experience -- must lock down a new bailout worth 130 billion euros ($175 billion). Greece needs some 80 billion euros of that sum in early 2012.

The plan includes fighting tax evasion, selling off state companies and cutting a famously bloated public sector.

On Thursday, tens of thousands of protesters are expected to join an annual rally to mark the Nov. 17 student uprising in 1973 that helped to topple the 1967-74 military junta.

The ranks of students and workers are likely to be swelled by middle-class Greeks who have diligently paid their taxes and blame the four-year economic crisis on a corrupt political elite and rich tax evaders.

Greece has witnessed mass rallies against unpopular austerity measures, with some protests descending into bloody clashes between riot police and demonstrators.

Commitment questioned
Samaras's refusal to commit in writing to implementing the terms of the new bailout will further test the patience and confidence of Greece's European partners, who have already begun to speculate publicly on whether the country of 11 million people has a future within the euro zone.

"Is there a bigger commitment than giving a vote of confidence to the government that has been formed for this reason (of implementing the bailout)?" Samaras told parliament.

As Greece's politicians debated, the European Central Bank stepped in to stem an accelerating sell-off of euro zone government bonds and the United States called for more decisive action to halt Europe's debt crisis.

In Italy, another technocrat catapulted into power by the crisis, Mario Monti, formed a new government to implement long delayed structural economic reforms.

But the appointments of Monti and Papademos have done little to convince investors that European countries can get their finances in order.

Contagion from the weakest debt-ridden euro zone economies such as Greece into bigger ones such as Italy and even France is now the dominant fear for global investors.

Despite the ECB's moves on Wednesday, Italian 10-year bond yields rose above 7 percent, the level generally seen as requiring an outside bailout.

In Athens, the GENOP-DEH union of state-owned utility PPC shut off power to the Health Ministry for four hours in a symbolic protest against the deeply unpopular new property tax.

The union has repeatedly refused to cut the power of low income earners who cannot pay. The tax usually amounts to hundreds of euros for an ordinary home and the union said the ministry itself owed 3.8 million euros in unpaid power bills -- a claim denied by the ministry and by the utility.

"We will stop, in any way we can, the cutting of power in the houses of the poor, the unemployed, the pensioner, the low-wage earner," GENOP-DEH President Nikos Fotopoulos told NET TV.

"Electricity cannot be used as a lever for blackmail."

In comments to parliament, Samaras echoed such concerns.

"They (the utility) should not cut power to those who cannot afford to pay the property tax," he said.

Thrashing out deal
Athens will shortly begin thrashing out a deal with private bondholders to cut its public debt, sources said, tackling a key pillar of the 130-billion-euro bailout plan agreed with euro zone leaders last month.

The plan envisages chopping Greece's 360-billion-euro debt load by a third and imposing a 50 percent loss on private bondholders, but it has been poorly received among Greeks who fear further waves of painful austerity.

Papademos, an academic economist, was due to meet the private sector's lead negotiator on the deal, Charles Dallara, managing director of the Institute of International Finance (IIF), in Athens late on Wednesday, the premier's office said.

Finance Minister Evangelos Venizelos may also meet Dallara on Wednesday, sources said.

The Financial Times cited a proposal from bank negotiators for Greek bondholders that said they would swap their debt only if new bonds feature high interest rates and had extra incentives, including annual payments if Greece's economy recovered more than expected.

It said the IIF had proposed three different options that all indicated a reduction of 51-53 percent in the value of the debt but cited a source saying Greece was proposing losses of 70-80 percent.

(Writing by Gareth Jones)