Resentment simmers as Greece launches debate on pension reforms

ATHENS (Reuters) - Farmers vowed to step up protests, nurses took to the streets and sailors prepared to strike as anger simmered in Greece on Tuesday over further pension cutbacks that are a condition for the indebted country to receive more international aid.

Amid rallies and protests across the country, Greece's politicians were scheduled to launch discussions in parliament on reforms seeking to cut 1.8 billion euros from its annual pensions bill.

Prime Minister Alexis Tsipras, a leftist who swept to power a year ago, is walking a political tightrope to keep lenders onside to complete an overdue review of reforms, without alienating his electorate altogether.

"This issue must be resolved," said Defence Minister Panos Kammenos, head of ANEL, the junior governing coalition partner.

"This government will solve the pension issue, others merely paid lip service to it."

Farmers who have been blocking motorways across the country sporadically for days in protest at plans to cut tax breaks for farming as well as pensions said they would escalate action and bring the country to a standstill unless Tsipras backed down.

"We will step up action by blocking roads, ports and customs offices for more hours," said Vagelis Boutas, head of a national committee coordinating the farmer protests.

Government officials say the pension system, which costs about 28.5 billion euros a year, is in need of a total overhaul before it faces collapse.

Mission chiefs from the European Commission, the European Central Bank, the euro zone rescue fund and the International Monetary Fund are due in Athens later this week to start the bailout review.

"ABOMINATION"

Euro zone and IMF officials have said the planned reform is ambitious but the numbers do not add up. They oppose plugging the funding gap partly by raising employer and employee contributions, as Tsipras proposes, arguing that would harm economic recovery and discourage legal employment.

Without pension reform, Athens cannot conclude the first review of its compliance to terms of a bailout worth up to 86 billion euros agreed last August, and move on with talks on potential debt relief, which Tsipras sees as a vital prize.

But that cuts little ice with millions of people, farmers included, who will see contributions jump to about 20 percent of monthly earnings to prop up the new pension system.

"We are taking a 20 percent cut in earnings, and this will force us to work 15 to 17 years more to get a pension which will be cut by about 25 to 30 percent," said Michalis Yiannakos, 55, a nurse.

"We will fight until the prime minister withdraws this abomination," he told Reuters.

Ship workers were also preparing for a 48 hour strike starting on Wednesday morning, keeping ferries and ships docked in the seafaring nation.

Government officials say formal parliamentary deliberation on the pension reform bill is expected in February, but lawmakers were to have a first debate on Tuesday. That will test both the cohesion of Tsipras' radical coalition and the reform credentials of new conservative opposition leader Kyriakos Mitsotakis.

Approval of the bill, likely to come to a vote early next month according to government officials, is far from certain, with wavering leftist lawmakers from farming regions threatening to cancel out Tsipras's three-seat majority.

(Writing by Michele Kambas; Editing by Paul Taylor)

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