EU, Greece strike debt agreement

EU, Greece strike debt agreement

ATHENS - Reuters
EU, Greece strike debt agreement

Greek Prime Minister Samaras (L) shakes hand with the EU’s Barroso.

Greek Prime Minister Antonis Samaras welcomed yesterday an agreement by international lenders to help cut his country’s debt and unblock bailout money to avert bankruptcy.

The biggest opposition party, however, dismissed the deal and criticized Germany for preventing Greece from writing off more of its 340-billion-euro debt.

After 12 hours of talks at their third meeting in as many weeks, euro zone finance ministers and the International Monetary Fund agreed on measures to reduce Greek debt by 40 billion euros ($52 billion), opening the way for 43.7 billion euros of rescue loans to be disbursed by early 2013.

“Everything went well,” Samaras told reporters outside the prime minister’s mansion at about 3 a.m. in the morning.

“Tomorrow, a new day starts for all Greeks,” he added.

International financial markets shared the optimism as worries over Greece’s debt situation subsided.

Samaras passed deeply unpopular austerity measures earlier this month to convince lenders that Athens deserved further aid payments under its ongoing EU/IMF bailout, despite missing earlier deficit and reform targets.

The wage and spending cuts contradicted Samaras’s pre-election pledges to soften the bailout deal, testing the cohesion of the fragile, conservative-led, three-party coalition he has headed since June. The Socialist PASOK, the coalition’s second-biggest party, also welcomed the agreement.

“This is the new start the country needs after nine months of waiting,” said its leader and former finance minister Evangelos Venizelos. “Now it’s up to us to make it work.”

Greece’s main stock market index also rose on the news, gaining 0.9 percent. But bank stocks dipped 0.6 percent on concerns that a debt buyback plan that forms part of the deal might hurt their battered capital.

Greece’s anti-bailout opposition dismissed the agreement altogether, saying it fell short of what was needed to make the country’s debt sustainable.

“It’s a half-baked compromise, a band-aid on the gaping wound of [Greece’s] debt,” said Dimitris Papadimoulis, senior lawmaker of the radical leftist Syriza party, the biggest opposition party which is leading in the polls.

‘Egoistic Merkel policy’

Papadimoulis said German Chancellor Angela Merkel was standing in the way of a 50 percent write-off of Greece’s debt, saying that was what Athens needed.

“[The deal happened] under pressure from the narrow-minded, egoistic, short-sighted economic policies of Merkel, who stingily watches over her money,” he said.

Greek newspapers were equally split about the deal. Greece’s top-selling daily Ta Nea depicted on its front page a smiley face next to the headline: “The first smile for Greece” after the country obtained a further 43.7 billion euros in aid. But Six Days, another daily, called the deal “a disastrous compromise ... holding Greece captive to severe recession and austerity without solving the country’s big debt problem.”