Greece Waits for EU's Answer: Pensions Cut, Military Spared

ATHENS – We’ve done our part, now you do yours, Greece has told leaders of the Eurozone and Troika who will decide whether the country gets a second bailout of $169 billion to complement a first ongoing series of $152 billion in rescue loans to keep the country from defaulting and being unable to pay workers and pensioners. European Union leaders were supposed to decide on Feb. 15 whether to release the money after Greece’s coalition government rammed through new austerity measures in the face of violent protests, but has kept Greece twisting in the wind, saying it may make up its mind in a meeting in Brussels on Feb. 20 – or maybe March 2, and even floating the idea that it may not decide until after Greece’s elections, tentatively set for some time in April or May.
All that delay has undermined the urgency to pass new cuts of up to 32 percent in the minimum wage and deprive private sector workers of bargaining fights, pushed through Parliament in one day by interim Prime Minister Lucas Papademos, who said Greece would have collapsed into chaos otherwise, and after Finance Minister Evangelos Venizelos said he wouldn’t have enough time to finish a deal to write down as much as 70 percent of Greece’s debt otherwise. Those deadlines have passed.
Leaders of the Troika of the EU-International Monetary Fund-European Central Bank said they wanted written assurances from the coalition, now compromised of holdover ministers of the former ruling PASOK Socialists and their bitter rival New Democracy conservatives to uphold the reform measures, and got them. Then they said they wanted Greece to show how it would make $426 million more in cuts in the 2012 budget and got it when PASOK leader George Papandreou, the former Prime Minister hounded out of office late last year in the wake of two years of protests, riots and strikes against austerity measures and New Democracy leader Antonis Samaras reneged on their promises not to allow cuts in pensions in return for cutting the minimum wage.
The newspaper Kathimerini reported that other cuts will come in special salaries, which include public sector wages for doctors, judges, diplomatic staff and the police. The cuts are expected to reach 10 percent and in some cases 20 percent of salaries and are set to come into effect on July 1, as opposed to September 1 as originally planned, and designed to save $118-$131 million, while another $65 million in cuts will be made in the health sector. Pensioners who thought they had been spared by pledges from Papandreou and Samaras will see their benefits cut a reported 15 percent while defense spending was exempted after the Troika rejected military cuts.
Government spokesman Pantelis Kapsis said Greece had no more loose ends. “The process for the new program and the cuts have been concluded,” he said. “There are no more economic issues outstanding.” He denied that some Eurozone finance ministers had suggested obtaining from Greece’s smaller parties a commitment to the package of austerity measures and structural reforms Parliament passed. He wouldn’t’ respond to a suggestion from German Finance Minister Wolfgang Schaeuble that Greece should postpone elections planned for April and install a technocratic government instead. “It is absolutely up to Greece when to hold elections,” Kapsis said. Dutch Finance Minister Jan Kees de Jager added to the pressure on Greece. “We’re back at square one,” he told Dutch MPs. “Greece is in a much worse state than had been anticipated at the time.” When Eurozone leaders agreed on more help for Greece in October, 2011 the country’s debt was expected to fall to 120 percent of GDP by 2020, which was taken to be the maximum threshold. The new level is now expected to be closer to 129 percent, according to the latest study by the IMF.