ATHENS – The German Bundestag has given its approval to a $172 billion second bailout of Greece as part of a deal worked out with international lenders after Chancellor Angela Merkel said it would be irresponsible for Europe to abandon Greece, and the Greek Parliament on Feb. 28 will vote on whether to pass more austerity measures to keep up Greece’s end of the bargain. Despite ferocious opposition from Germans, who oppose the bailout, Merkel easily got it passed by a vote of 496-90, even though she said it might not work. “No one can give a 100 percent guarantee of success,” she said.
Greece is already receiving a series of $152 billion in rescue loans from a first package and Germany’s Finance Minister Wolfgang Schaeuble earlier warned that the beleaguered country, struggling with a $460 billion debt created by decades of political parties packing public payrolls with political hires, might need a third. As part of the second agreement, Greece is working out a plan to wipe out $130 billion of its debt with private investors, but even that is not expected to stop the country’s slide toward insolvency unless Greece can become more competitive, round up tax evaders, and privatize its entities.
While Germany’s approval was seen as the most crucial in the 16 other countries in the Eurozone that use the euro as a currency because it is Europe’s biggest economy and contributes the most toward saving Greece, the Parliaments of the Netherlands and Finland are next to consider the deal. It would come at a great cost to Greek workers and pensioners who are already suffering under two years of pay and benefit cuts and tax hikes. The European Union will deliberate on the deal in a meeting on March 1-2.
The Greek Parliament now is expected to okay more cuts in pension benefits, despite the vows of interim Prime Minister Lucas Papademos and his partners in a temporary hybrid government, the former ruling PASOK Socialists and their bitter rival New Democracy conservatives they would not do so. They signed off a cut in the minimum wage of up to 32 percent as part of a plan to save pensions, but now both will be cut and private companies are already lining up to make big cuts in their worker’s salaries too.
Papademos was to convene his Cabinet on Feb. 28 to consider more new laws and regulations that will hurt working class Greeks, pensioners and the poor. The next few days will also see the issuing of dozens of circulars aimed at pushing through delayed reforms including opening up closed professions and cutting operational costs in the public sector, including in education, pharmaceuticals and defense.