Greek Coalition Partners Disagree, But Back More Austerity



ATHENS –After a tense showdown that threatened to break up an already uneasy coalition government, Greek Prime Minister Antonis Samaras said on Aug. 1 that he had convinced his reluctant partners, PASOK Socialist leader Evangelos Venizelos and Democratic Left leader Fotis Kouvelis to go along with $14.16 billion in new austerity measures – likely to include more deep pay cuts and slashed pensions – that had been demanded by international lenders.

Without an agreement, there was a likelihood that a pending $38.8 billion loan installment that is the last in a first series of $152 billion in rescue loans, and an on-hold second bailout of $173 billion that Greece needs to avoid bankruptcy, could have been stopped by the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) that insisted on more austerity and new reforms, including the privatizing of state enterprises and sale or lease of state-owned properties.

Samaras had made it clear that any renegotiation with Troika depended on first imposing more Draconian measures on Greek workers, the elderly and the poor, which he said he opposed before winning the critical June 17th elections. Venizelos said he wanted only half the cuts to be made over the next two years and the remainder until 2016, but Troika officials rejected that idea. “The prime minister’s proposal was accepted by political leaders,” Finance Minister Yannis Stournaras told reporters after a nearly three-hour meeting.

The agreement buys Greece some time to impose more reforms and avoid the chance that the new coalition government – formed only because Samaras did not have enough of the vote to control Parliament and a stalemated May 6th election failed to yield  a government – would collapse and yet another election would be held.

No specifics on the cuts were revealed, although there were reports that workers, elderly and the poor will be hit again, creating the prospect of more of the protests, strikes and riots that brought down the PASOK government of former Prime Minister George Papandreou last year. Venizelos and Kouvelis asked Samaras to pressure the Troika to convince the lenders not to support measures that would make the economy worse. But while the government said the new measures would be “as fair as possible,” it was clear the burden would again be borne by Greece’s most vulnerable classes while tax evaders owing the country some $70 billion, and the rich and privileged would again escape sacrifice.

Samaras was said to be adamant that Greece had to obey the Troika, although when the PASOK Socialists were in power from 2009-11, he opposed the terms, then changed his mind to support to them so he could be part of a temporary government with his rivals before this year’s elections. Venizelos said he supports the government for now but said that some weeks from now, if the measures are not working, he would re-evaluate his stance. As finance minister in a former government, Venizelos doubled income and property taxes and taxed the poor but now says that measures have unfairly hit the weakest segments of Greek society.

Samaras made a reference to talks he had with European Commission President Jose Manuel Barroso and Troika officials who warned him that Greece had no choice but to make the cuts and impose more reforms or the country could be forced out of the Eurozone of the 17 countries using the euro as a currency. “This decision gives a climate of international credibility. As Prime Minister I have the duty and responsibility …. If we didn’t make the decision now we would be in isolation and behind closed doors.”

The Troika had warned that any attempt to tinker with reforms or fail to make more cuts could lead to the end of the bailouts, leaving Greece without enough money to pay workers or pensioners. No specifics of what would included in the new round of austerity was immediately available, but Venizelos said it would be announced by Samaras later.

The three had been debating since last week where the cuts or savings should be made but couldn’t agree after Venizelos and Kouvelis said they didn’t want any more pay or pension cuts. Before the critical June 17th elections and after he was elected, Samaras said he, too, did not want to make those cuts but now said that Greece has no choice but to do what the Troika wants and wait until after more reforms to try to buy more time.


2 COMMENTS

  1. Greece is a complete failure. Better to hand over the keys to outsiders to bring life and prosperity to the country and the people. These politicians are useless and worthless.

  2. So, if I read this correctly, all three of the parties in Greece’s governing coalition are in favor of imposing austerity on the weak and poor, so that the Troika will free up hundreds of billions of Eurozone assistance and IMF assistance to Greece.  But then these three will wait a couple of weeks, and reserve to themselves the right to change their minds.

    What will happend then?  Will the pension reductions be rescinded in Greece as the retirement age extenstion was rescinded in France?

    The fundamental problem with these Eurozone solutions is that they overlook the fundamental flaw:  the countries of the Eurozone must start to act as a single nation, and the Peoples of Europe must begin to act as Europeans, rather than as Germans, Greeks or French.