Samaras, Papandreou Renege on Vows to Save Pensions

ATHENS – Only days after they said they had saved pensioners from cuts as part of a second bailout of $169 billion – which still hasn’t been agreed up by international lenders – the leaders of the Socialist PASOK party, former Prime Minister George Papandreou, and his bitter rival New Democracy conservative leader Antonis Samaras, the only ones left in the country’s coalition government, have relented to demands the elderly have their benefits cut. The Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) rejected Greece’s plan to cut defense spending instead and directed Greece to cut pensions as part of $427 billion in reductions to the 2012 budget.
The Troika has held up release of the bailout package until Greece earmarks the cuts. The second deal could see as much as 70 percent or more of the monies go back to banks and Germany and France, the biggest contributors, are major arms suppliers to Greece and could suffer if defense spending was cut. Interim Prime Minister Lucas Papademos, a former ECB Vice-President, admitted the government had given in to Troika demands and will cut both basic and supplementary pensions, the last lifeline for many elderly during the economic crisis, and some will see the benefits they paid for and earned over decades of contributions cut to as little as $394 a month, their only income. Papademos tried to downplay the change-of-heart and said the impact of pension cuts the government said it wouldn’t make would be “milder” than many expected.
There will be a 12 percent cut to primary pensions above $1,700 euros a month, with the exception of the seamen’s fund pension (NAT,), which will see reductions of 7 percent. These will include the “gilt-edged” pensions paid out by public utilities and banks. Pensioners receiving $263-$329 a month will have their benefits cut 10 percent, while those making $330-$394 will be cut 15 percent, and those above $395 will be cut 20 percent, reducing their benefits to $335 a month. Meanwhile, while a number of tax evaders costing the country $60 billion have been arrested, there have been no high-level prosecutions and one businessman accused of fraud and arranging $1 billion in unsecured loans from a bank in which he was a principal has not faced trial yet. The government said pensioners whose income is less than $263 a month won’t be cut but is proceeding with another Troika demand to cut the minimum wage as much as 32 percent, which Papandreou and Samaras agreed to in exchange for saving pensions, but now both will be cut.
They made no statements on the reversal in course and Samaras has agreed in writing to support the cuts he adamantly opposed when Papandreou was in power before the Socialist leader quit on Nov. 11, 2011 in the face of 18 months of protests, riots and strikes against the austerity measures the Troika said were needed  because PASOK and New Democracy had taken turns for more than 30 years packing public payrolls with political hires in return for votes and that the result is a hugely bloated public sector with hundreds of thousands of needless workers, some 150,000 of whom are now slated to be fired over the next three years.
Labor Ministry officials said the pension cuts could save as much as $526 million, although they could leave many pensioners destitute. Pensions are being cut more than earlier estimated because the government said it could not make cuts in other areas of the budget, although there will be salary reductions for “special” income earners such as doctors, judges, diplomats and the police, of as much as 20 percent, which could save another $131 million, while there will be $65 million in cuts for health.
Finance ministers of the Eurozone, the 17 countries that use the euro as a currency, will consider the package at a meeting in Brussels on Feb. 20. The government rammed through the reforms during violent demonstrations on Feb. 12 because Finance Minister Evangelos Venizelos, who has doubled income and property taxes, said Greece would otherwise not meet a Feb. 15 deadline to get Eurozone approval and Papademos said the country would collapse into chaos otherwise. The deadline was missed without consequence, as have many others before it.