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ECONOMICS > Greece still to convince Europe after rescue deal

ATHENS - Agence France-Presse

The Greek Parliament’s approval of an unpopular package of budget cuts fails to totally convince the European creditors, as Germany remains cautious. Street protests emphasizes that implementing the planned measures is not an easy task

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Protesters clash with riot police in front of the Greek Parliament in Athens on Feb 12.  AFP photo

Protesters clash with riot police in front of the Greek Parliament in Athens on Feb 12. AFP photo

The Greek government came under pressure yesterday to convince skeptical European capitals that it would stick to the terms of a multi-billion-euro rescue package endorsed by lawmakers during violent protests on the streets of Athens.

Parliament backed drastic cuts in wages, pensions and jobs on Feb. 12 as the price of a 130-billion-euro ($172 billion) bailout by the European Union and International Monetary Fund (IMF), as running battles between police and rioters outside parliament drove home a sense of deepening crisis.
The EU welcomed the vote, but told Greece it had more to do to secure the funds and avoid a disorderly default next month that would have “devastating consequences.”

Eurozone finance ministers meet tomorrow, and the fragile ruling coalition of Prime Minister Lucas Papademos has until then to say how 325 million euros of the 3.3 billion euros in budget savings will be achieved.

A government spokesman said political leaders also had until tomorrow to give a written commitment that they will implement the terms of the deal, reflecting fatigue in Brussels over what EU leaders say have been a string of broken promises.

The spokesman said an election would be held in April, when deep public anger over the second round of austerity since 2010 could drive voters to the left and right and test Greece’s commitment to the cuts.

First reaction from eurozone paymaster Germany was cautious.

“Now we need to wait and see what comes after the legislation,” Economy Minister and deputy Prime Minister Philipp Roesler said on German television.

“We have taken one step in the right direction but we are still far from the goal,” he said.

Hard to implement


“Adopting the austerity package is one thing, implementing it is another, and this is something in which we have to place great store,” said Austrian Vice Chancellor and Foreign Minister Michael Spindelegger.
Greece needs the international funds before March 20 to meet debt repayments of 14.5 billion euros, or suffer a chaotic default.

EU Economic and Monetary Affairs Commissioner Olli Rehn said a disorderly default would have devastating consequences for Greek society. Papademos had warned of a “social explosion” if lawmakers rejected the deal and Greece defaulted. But the unrest outside suggested Athens might already be on the brink.

“The people yesterday sent a message: Enough is enough! They can’t take it anymore,” said Ilias Iliopoulos, general secretary of public sector union ADEDY.

Firefighters yesterday doused the smoldering remains of cinemas, shops and banks set ablaze in Athens.

February/14/2012

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