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The Economist Says Greece On The Edge

Greece Financial CrisisThe noted financial magazine The Economist said that despite Greece’s aim of achieving a primary surplus this year in hopes of triggering a chance at cutting its debt to international lenders that growing social unrest could unravel Prime Minister Antonis Samaras’ plans of righting the economy.
It noted that the first tear gas shots fired outside the Parliament in months amid protests over a scheme to suspend or fire up to 40,000 public workers has created more anger despite Samaras trying to convince beleaguered Greeks buried by three years of pay cuts, tax hikes and slashed pensions that it’s necessary to save the country.
A series of strikes this week, led by high school teachers staying off the job for five days, with snowballed into a massive two-day general strike called by the country’s labor union representing public workers has created new anxiety with riot police firing chemical weapons to break up a protest of school crossing guards who had occupied the Ministry of Reform in rage over being fired while more highly-paid workers, managers and consultants were exempted and as Samars okayed the hiring of 150 more workers in Parliament, who are also exempt from austerity measures.
The magazine noted that Administrative Reform Minister Kyriakos Mitsotakis has been scrambling to find another 1,500 people to be put on a firing list of 12,500 workers that the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) wants let go in return for continuing a second bailout of $173 billion. A first for $152 billion has been spent without making a dent in the country’s still staggering $390 billion debt.
University rectors objected to his last-minute proposal to include secretaries, laboratory technicians and computer support staff, it was reported, and they threatened to close their schools if he went ahead on his own and picked who would be transferred, suspend at 75 percent pay or dismissed. Mitsotakis promised there would be reviews of workers before deciding on dismissals but has reneged on that.
Mitsotakis had to cast around half a dozen ministries to try to make up the numbers days before the Troika envoys arrive to check up on Greece’s progress.
Another 12,500 jobs must be cut by the end of 2013. Workers dumped in the reserve on 75% of their pay will be given eight months to find a new public-sector job. According to the magazine, the striking teachers are backed by Alexis Tsipras, leader of the radical SYRIZA party, the main opposition, who wants to bring down the government.
“The mood is edgy. Middle-class Greeks are struggling to pay three years’ worth of property taxes. Rumors are rife of another cut in pensions to help plug a widening deficit at IKA, the biggest social-security fund. Mr. Samaras’s New Democracy party has fallen a point behind SYRIZA in some recent polls,” the report said.
Greece is on track to achieve a primary budget surplus this year before debt repayments, but will still need an extra €4.4 billion ($5.9 billion) from its creditors next year and €6.5 billion in 2015. Some indicators suggest that this year’s recession will be shallower than forecast and that the economy will grow by 0.8% next year. Athens officials hope to begin discussing debt relief, perhaps involving another reduction of interest rates, and an extension of loan maturities, once Eurostat, the EU’s statistical arm, confirms the primary surplus in April.
Despite this encouraging news, Samaras said he’s worried about a political “blind spot” that extremists can exploit when the economy has begun to improve but ordinary Greeks feel nothing has changed. Opinion poll support for the neo-Nazi Golden Dawn party has jumped from 10 to 15 percent as it objects to the harsh conditions being imposed.
That survey was taken before one of its members was arrested on charges of killing n an anti-fascist. The Economist noted that a return of the old strife between left and right now seems all too possible.

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