Greek mayors protest transfer of local cash reserves to central gov't

Greek mayors joined municipal employees and other professionals in a string of demonstrations here on Friday over the obligatory transfer of local administration cash reserves to the central government.

Prime Minister Alexis Tsipras had earlier requested this in order to resolve an urgent liquidity shortage. The protests came as lawmakers were having a heated debate on the matter inside the parliament.

"Take your hands off the autonomy of municipalities," read banners raised by protestors as a delegation of mayors from across Greece entered the parliament to hand over a resolution against the Leftist government's initiative earlier this week to seize "idle" cash reserves to cover immediate financing needs.

There are been no international financial aid for months as negotiations with lenders over the conditions of future cooperation drag on since February. The Greek state meanwhile is facing an increasing cash squeeze.

In addition, Greece faces the specter of a looming credit event again and a possible exit from the euro zone, some analysts have said.

Earlier this week, Tsipras issued a decree requesting the forced transfer of funds from local administration to a special central bank of Greece account to be used in order to pay pensions, salaries and loan installments to lenders in coming days and weeks.

Greece needs about 4 billion euros (4.33 billion U.S. dollars) to cover its basic financial needs in May, Deputy Finance Minister Dimitris Mardas said on Friday, after assuring that the country would marginally meet all its obligations in April.

Government officials have repeatedly argued that all "temporarily seized" cash reserves will soon be returned to municipalities, regional governments and all other public entities with an interest.

Mayors and regional governors have not been convinced. They demand a meeting with Tsipras and "clear answers" on how crucial is the situation, stressing the "unconstitutional" character of the step. The Greek Constitution guarantees the "autonomy of local administration."

"I believe the dialogue could help correct an unconstitutional move," said George Patoulis, Mayor of Marrousi Municipality and head of the Association of Greece's Municipalities.

"If deemed necessary and if we will be persuaded that the reserves will be used for the payment of pensions and salaries and that we will get them back, we will help," Dionissis Hatzidakis, mayor of the southern Athens suburb of Palaio Faliron, added.

Protesting mayors and regional governors noted that under Greece's legislative framework, they could face lawsuits by citizens who could blame them for the misuse of local administration funds. Others underlined that several of these cash reserves were not idle, but were to be used for works.

Inside parliament, opposition parties raised similar questions and several deputies walked away from the debate in protest of procedural issues amid escalating tension.

The conservative main opposition New Democracy party eventually demanded a roll call vote which, if the debate continues, is expected to be conducted on Friday night. Endit