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EU Postpones Loan as Greece Runs Out of Money

Greek Finance Minister Evangelos Venizelos worries Greece could be forced out of the Eurozone

ATHENS – Greek Prime Minister George Papandreou’s abrupt decision to cancel a planned trip to the United States to attend the United Nations General Assembly annual opening and meet with IMF Director Christine Lagarde, and U.S. Treasury Secretary Timothy Geithner came after he learned the next installment of $11 billion from international lenders as part of a rescue package to keep Greece from going bankrupt and keep paying its workers and pensioners had been postponed.
Greece is receiving a series of rescue loans of $152 billion from the Troika of the European Union-IMF-European Central Bank and the next installment was due in mid-September but will be delayed until Oct. 3 and granted only if inspectors believe Greece is making enough progress in implementing new austerity measures and privatizing state-run entities and selling or leasing properties, to raise $71 billion.
Leaders of the Eurozone, the 17 countries that use the euro as a currency, agreed in Brussels on July 21 to extend a second bailout of $157 billion, although the injections of money have failed to halt Greece’s slide toward bankruptcy and critics said the country is just piling debt on debt and inevitably will fail. Papandreou said he needed to remain in Greece to deal with the growing crisis, but was chastised in Greek newspapers as fleeing the country when he was most needed.
“The prime minister … decided to postpone his scheduled visit to the U.S. because the coming week is especially critical for the implementation of the Eurozone’s decision of July 21 and the initiatives (Greece) must undertake,” his office said in a statement. Media reports in Greece said Papandreou made the decision to stay after talking with Finance Minister Evangelos Venizelos, who attended a Eurozone meeting in Poland and told reporters that there are “delays and ambivalence” among Eurozone members, some of whom are balking at their share of the bailout payments. “These may harm the Eurozone, but will be catastrophic for us,” Venizelos said without elaborating. “The specific timing of the payment (of the installment) is an important issue. Everyone knows how our reserves are developing,” Finance Minister Evangelos Venizelos said.
The Troika broke off talks with Greece briefly last month and its inspectors walked out of Athens, complaining that Papandreou has not moved quickly enough to implement more strict austerity measures, although he has instituted deep pay cuts and big pay hikes and slashed pension benefits and has already begun another round, including an emergency property tax and retroactive pay cuts that will cost teachers, for example, $525 more per month, reducing the salaries of veterans with 30 years experience to less than $18,000 a year. Thousands of state workers are also going to be put into a labor reserve pool, laid off for a year with a 40% pay cut, and then fired unless it’s determined they are needed in a country with a bloated public payroll thanks to lifetime job guarantees that have now evaporated.  He also blasted union members and opposition parties, who called for non-payment of the property tax, saying that this would mean that Greece’s Eurozone partners would reduce their revenue estimates from the tax and demand additional austerity measures.
He is set to have a teleconference meeting on Sept. 19 with members of the Troika. Without the next installment from the Troika, Greece won’t have enough money to pay public sector wages and pensions, which Venizelos said would be “truly dramatic” and force Greece out of the Eurozone. Sources told the Athens newspaper Kathimerini that Venizelos was cross examined severely over what he will do to reduce the country’s deficit, which is still hovering near 10%, and cut its $450 billion debt.
 
 
 

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