No Holiday for Greek Government: Make or Break Time

ATHENS – As the bad economic news keeps piling up for Greece – retail sales for this year were down 30 percent, and storeowners say people are window shopping but not buying much for Christmas – the shaky coalition government faces a crucial 30 days ahead, through recession-wracked holidays and into the New Year, as it tries to negotiate a second bailout of $175 billion and reach an agreement with investors to write off 50 percent of much of the country’s debt.
“It will be a crucial period…a very important month with tough negotiations that will define both the future of the euro and our relationship with the Eurozone,” government spokesman Pantelis Kapsis told reporters. European leaders are planning to hold a summit on the Eurozone debt crisis in late January or early February, Kapsis said, furthering the likelihood that elections will not take place as scheduled on Feb. 19.
A crisis government led by former European Central Bank (ECB) Vice President Lucas Papademos and compromised of holdover ministers from the former ruling PASOK Socialists, their bitter rival New Democracy conservatives and the far Right-Wing LAOS party is struggling to hold itself together and reach an accord with the Troika of the European Union-International Monetary Fund-ECB, which is already providing a first round of $152 billion in rescue loans that came on condition of deep pay cuts, tax hikes, slashed pensions and scores of thousands of layoffs that have created a deep recession of 17.5 percent unemployment and the closing of more than 100,000 businesses, with thousands more likely to close in the new year as well, making 2012 even more desperate than 2011. Greece is buried under a $460 billion debt and 10 percent deficit that even the austerity measures have failed to abate.
Papademos said talks with Greece’s lenders are “composite and complex” and involve demands from investors that British law prevail, not Greek law. That came as the chief of an EU task force based in Athens to oversee the government’s handling of the economy insisted that its role is not to punish Greece, but to help with disbursement of the loans. In an interview with SKAI television, Georgette Lalis said the European team’s role is not to interfere with the country’s sovereignty although it has insisted on the austerity measures and pressed Greece to also scrap the minimum wage.
“We are not a government, we are more like middle men,” said Lalis, adding that her team has the knowledge to facilitate the disbursement of billions of euros in EU structural funds and help provide expertise in overhauling ailing areas of public administration. “The task force neither supervises nor punishes. It recommends and evaluates,” she said. The task force officially assumed its role in Greece on September 1 and last month published the first quarterly report on its work. The team is made up of about 25 people in Brussels – led by the European Bank for Reconstruction and Development (EBRD) Vice President Horst Reichenbach – and with 12 people in Athens headed by Lalis, a Greek who has been a civil servant with the European Commission since 1981.
Despite the reassurance, Greeks will have to prepare themselves for more deep cuts, including talk that pensions could be slashed by at least 15-25 percent starting in January, and that bank deposits could face similar assessments, increasing chances those Greeks who have any money in Greek banks will pull out the funds and transfer them out of the country. Greeks have been protesting, rioting and striking since the era of austerity began in April of 2010, to no avail.