Papandreou Pushes On With Austerity, Workers Face the Axe

THESSALONIKI – With Greece only weeks away from bankruptcy without a new instalment of international aid, and scores of thousands of demonstrators on the streets protesting pay cuts and tax hikes, Greek Prime Minister George Papandreou said he will forge ahead with a new round of painful austerity measures – including the firing of thousands of public workers who have held lifetime job guarantees.
This long-established patronage system has created a bloated public sector that, with corruption and tax evasion, threatens to sink Greece and even topple the 17 countries of the Eurozone who use the euro as a currency.
Speaking Sept. 10 during the annual Thessaloniki International Trade Fair that traditionally has been used to promise more government handouts – and amidst speculation that Greece will soon default – Papandreou vowed to speed up reforms demanded by the so-called Troika of the European Union-International Monetary Fund-European Central Bank who are loaning Greece $157 billion in emergency rescue loans and have said a second bailout of $152 billion is coming.
That funding is contingent on Papandreou instituting reforms to the country’s economy, which is staggering under a $460 billion debt. But the measures have largely backfired, creating a deep recession, 16% unemployment and a Gross Domestic Product that shrank 7.3%. Talks between Greece and Troika officials broke off earlier this month after the lenders said Papandreou has been dragging his feet on some measures, including the privatization of state-run entities to raise $71 billion.
Without the next loan instalment of $11 billion due this month, Greece will run out of money to pay its workers and bills, and the situation is already so dire that students will not receive their text books with the opening of the school year on Sept. 12. A growing coalition of the disenchanted – a curious mix of workers, pensioners, college students angry over a slew of educational reforms, and even sports fans, joined demonstrations here with taxi drivers fighting the liberalization of their industry and Greece girded for an array of strikes next week, including doctors, tax collectors, and garbage collectors.
“We will push through all the major changes our country has needed for years,” Papandreou said in a nationally televised address. “And we will take whatever other decisions are needed, we will do whatever is necessary to keep the country on its feet.” He said that includes breaking a politically sacred contract with public workers to guarantee their jobs, a traditional trade-off between political parties and unions in return for support and votes.
Papandreou said the  main concern of his ruling PASOK Socialist party was to keep the country solvent, even though he has had to abandon its platforms and the principles established 20 years when his father, Andreas Papandreou, was Prime Minister. “We don’t have the right to abandon this effort halfway through,” he said. “Because if it remains half-done, (our) sacrifices will have been in vain.” With a nod to the economic conundrum over the need to adopt austerity measures while recognizing the pain they have caused workers, pensioners and the poor and deepened the recession.
Papandreou said he will push ahead with more reforms, although another condition for the aid – going after tax evaders costing the country $40 billion a year – has not been a priority, apart from publishing the names of businesses and sports teams who aren’t paying taxes.
Greeks, whose anger has spilled over into the streets with a series of protests and riots since Papandreou began his reforms 18 months ago, are ired over what many feel is the call for them to sacrifice while the country’s rich elite of business executives, bankers, and politicians have been spared. “Even if the recession this year is appreciably bigger than the original forecasts…Greece will meet its fiscal targets doing all it has to do,” Papandreou said.
As he spoke, clashes broke out between riot police and demonstrators as Greek workers, students and ordinary citizens took to the streets of Thessaloniki to protest government overhauls. Demonstrators hurled projectiles at police, who responded by firing tear gas. Police said that more than 25,000 people took part and that they detained 94 people and made at least two arrests. At least one person was reported hurt.
The demonstrations included at least a half-dozen separate protests and rallies by Greece’s two major umbrella unions – the private-sector GSEE and its public-sector counterpart ADEDY – and the Communist-backed labor union PAME, as well as students, other left-wing groups, and  Greece’s new grassroots movement of self-styled “Indignant” citizens.
Finance Minister Evangelos Venizelos earlier said that Greece plans to eliminate as many as 120,000 public-sector workers, either through layoffs or placing them in a reserve labor pool for a year with their salaries reduced by 40%. After that, the workers, barring any transfers to new government jobs, will be laid off altogether. The government also is looking to streamline and reduce public-sector salaries by eliminating special benefits that make up a quarter or more of civil servants’ pay, fomenting social unrest.
Venizelos insisted that Greece can survive, despite assessments by many economic analysts it’s a mathematical impossibility. “Whoever believes that Greece has been broken or has no hope is clearly out of touch with reality,” he said. “The two coming months are crucial for the very existence of our country. These are two months whose every day counts as a year in terms of effort.” The pressure is mounting on Papandreou. “Everyone is turning the screw,” David Lea, an analyst at Control Risks, an independent risk consultancy, told the Wall Street Journal. “There is a gradual loss of confidence across Europe in Greece’s ability to deliver on its reforms. At the same time, with increased tensions within (the ruling Socialist party,) sooner or later the government is going to face a fresh rebellion again.”