Prime Minister Antonis Samaras is fighting for more time to implement reforms and austerity.
By Andy Dabilis for Southeast European Times in Athens -- 24/08/12
Greece's Prime Minister Antonis Samaras (left) talks to Luxembourg's Prime Minister and Eurogroup Chairman Jean-Claude Juncker in Athens on Wednesday (August 22nd). [Reuters]
Under pressure to make at least another 11.5 billion euros in cuts, and possibly more, the Greek coalition government headed by Prime Minister Antonis Samaras is again aiming the axe at workers, pensioners and the poor amid warnings this could be the final opportunity for Greece to make reforms or risk losing international aid.
Ahead of visits Friday and Saturday to meet with German Chancellor Angela Merkel and French President Francois Hollande, Samaras met with Eurozone chief Jean-Claude Juncker. The prime minister is seeking a two-year extension to make reforms and meet fiscal targets, but got no reassurances.
"The ball is in the Greek court," Juncker said. "This is the last chance and Greeks have to know this." He said Greece was suffering from a "credibility crisis," after previous governments failed to go after tax evaders who owe the country more than 50 billion euros, and to privatise state entities.
PASOK and the tiny Democratic Left comprise the coalition led by Samaras, but have been resisting his insistence for more of the austerity measures demanded by the EU-IMF-ECB Troika that have worsened a deep recession, left nearly 2 million people without jobs and is shrinking the economy by 7 percent.
With few options, Samaras is turning again to the same sectors that have borne most of the burden.
The cuts are expected to include further reductions to salaries, a fourth round of slashed pensions and the elimination of auxiliary pensions, which will reduce the lump sum paid to pensioners by 23 percent. Also expected are cuts to salaries in protected sectors, such as workers in state enterprises along with judges, doctors, academics and military officers.
George Stathakis, an economics professor at the University of Crete and advisor to Coalition of the Radical Left (SYRIZA) leader Alexis, said the government has boxed itself in. "Half of what they are talking about is fake," he told SETimes. "They won't get an extension."
Samaras said Greece will stand by its commitments, but told the German newspaper Bild that, "All we want is a bit of 'air to breathe' to get the economy running and to increase state income."
However, the extension may require another 20 billion euros to 50 billion euros in loans.
Samaras is telling Greeks, who are furious over two years of austerity, they have no choice and that the hardships would be worse if Greece goes back to its ancient drachma.
"The consequences would be a catastrophe for Greece. It would mean at least five more years of recession and push unemployment above 40 percent … a nightmare for Greece: economic collapse, social unrest and an unprecedented crisis of democracy," the prime minister said.
The government is reportedly set to lay off as many as 45,000 public workers at a further reduced pay for two to three years, although the Troika's target is to reduce the workforce by 150,000 over that period.
George Tzogopoulos, a research fellow at the Hellenic Foundation for European and Foreign Policy in Athens, told SETimes that the government hasn't delivered because of a lack of political will.
"Greece needs both austerity and reforms," he said. "And to go after tax evaders," who have thus far escaped prosecution. "The easiest thing to do is to go after workers and pensioners," he said.
The Troika initially estimated as much as 50 billion euros in revenue was possible by selling or leasing state properties and entities, but only about 3.2 billion has been realised. Samaras said he's even ready to sell or lease uninhabited Greek islands.
Haralambos Tsardanidis, director of the Institute for International Relations in Athens, said Samaras has almost nowhere to go in trying to raise revenues, as Greeks have nearly stopped spending and 68,000 businesses have closed in the last two years.
"They try to find money from public workers and pensioners because they have no other way to make these cuts, and it's going to be much more than 11.5 billion euros," he told SETimes.
Still, Tsardanidis said Samaras may be able to buy time if he can convince the Troika that this government is serious. "The short-term objective is to prove Greece has credibility."
As for the likelihood of more social unrest, "The government knows very well about the social consequences but that's not their priority," he said.