By Harry Papachristou
THESSALONIKI, Greece (Reuters) - Prime Minister George Papandreou will seek to soothe austerity-weary Greeks with an emphasis on growth in a speech on the economy on Saturday, but budget constraints leave him little to offer.
Tied by the conditions of a 110-billion-euro ($139.4 billion) EU/IMF bailout deal to rescue Greece from bankruptcy, his socialist government has imposed tax rises and draconian salary and pension cuts to fight deficits, prompting strikes and protests.
"We are fighting for the survival of Greece," Papandreou will say according to a summary of his speech released by his office. "Either we'll win together, or we'll sink together."
His government will continue pushing reforms and opening up sectors of the economy such as electricity and freight transport and also overhaul loss-making state firms including Hellenic Railways (OSE), according to the draft.
But it includes no relief for recession-hit Greeks.
"Papandreou cannot promise handouts as fiscal conditions do not allow it. He is unlikely to draw an overoptimistic picture, to avoid the risk of relaxation in the effort to repair public finances," said political analyst George Sefertzis.
"I expect him to signal that not only the (fiscal) operation must succeed, but that the patient must also survive it."
Papandreou cannot afford any relaxation of measures to appease a restive public and risk the wrath of international lenders when he speaks at 8 p.m. (1700 GMT) at a trade fair in the northern city of Thessaloniki.
Labor unions, which have locked horns with the government repeatedly this year, have planned rallies which some analysts say may launch a new season of protests as austerity is starting to be felt on the streets.
POLICE READY FOR PROTESTS
Police said more than 4,000 officers would be deployed in Thessaloniki, where protests have turned violent in the past.
Police said they expected about 20,000 protesters and some city shops covered their windows with wood panels.
A 59-year-old doctor attempted to throw a shoe at Papandreou as he toured the trade fair but was arrested before the premier was made aware of the incident.
Last October, Papandreou capitalized on a wave of anger at scandals to trounce his conservative rival, Costas Karamanlis, who broke the tradition of making generous promises at the Thessaloniki fair and told Greeks he would freeze public sector salaries, eventually losing the election.
But huge deficits inherited from the conservatives plunged Greece into a debt crisis that shook the euro zone and international lenders stepped in to rescue the country in exchange for tough belt-tightening measures.
Consumption has been hit as public sector wages were cut by 15 percent, pensions by 10 percent and value added tax increased by 4 percentage points to 23 percent.
The economy is set to contract by 4 percent this year and unemployment hit 11.6 percent in July from 8.6 the year before. Germany's Aldi, the world's biggest discount food retailer, and French retailer FNAC said last month they were leaving the Greek market because of the recession.
"We are waiting for a sign that there will soon be growth incentives," said Telemachos Pentzos, 36, manager at a Thessaloniki food export company. "There is intense pressure from competitors and the barrage of measures so far has not helped investments."
(Additional reporting by George Georgiopoulos; Writing by Dina Kyriakidou; Editing by Janet Lawrence)
