Greek Prime Minister Antonis Samaras’ hopes to get a quick sign-off from international lenders on his uneasy coalition government’s plan to make $14.6 billion in spending cuts the next two years were dashed when they told him the projections were off target and that he has to start shedding public payrolls of scores of thousands of workers quickly.
With his reluctant partners, the PASOK Socialists and tiny Democratic Left, already balking over some of the measures, particularly pay cuts, slashed pensions and the plan to lay off 35,000 workers and then fire them, Samaras finds himself in a political and economic dilemma.
The Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) is withholding a $38.8 billion loan installment, the last from a $152 billion rescue package, and said it won’t release a second bailout of $173 billion until he complies.
The stumbling block is believability, as Troika inspectors said they don’t find the projected savings in some areas to be credible, particularly health care, reduced administrative spending and defense cuts. There was little progress on Sept. 10 in talks they had with Samaras and his Finance Minister, Yiannis Stournaras, admitted: “It’s a difficult decision. We are trying to convince them of the soundess of our positions.”
A senior Greek officials told the news agency Reuters that the Troika was hanging tough, even as strikes have begun in Greece from workers enraged that the government is planning another round of austerity that Samaras admitted as “unfair and unjust,” but which he said were necessary to prevent the country from going bankrupt and being forced out of the Eurozone of the 17 countries using the euro as a currency. “They insist on rejecting the measures that concern the restructuring of the state,” the official said. “We insist that they accept them.”
Samaras finds himself at odds with both the Troika and PASOK leader Evangelos Venizelos and Democratic Left chief Fotis Kouvelis, whose constituency is public workers and labor unions who have vowed to resist more cuts, and as both parties find their popularity plummeting. They don’t want to fire workers, and the Greek Constitution forbids the practice. “Our European partners must realize that the Greek people can’t take it anymore,” Kouvelis told reporters after meeting Samaras a day before the Premier met the Troika.
But compounding the position of Venizelos and Kouvelis is that the Greek civil service is packed with hundreds of thousands of unnecessary workers hired in return for votes and who do almost nothing except collect pay checks.
Before the Troika’s hardline, Samaras got a little hope from German Chancellor Angela Merkel, whose country is footing much of the bailout bill, when she suggested his idea of getting more time to implement reforms and meet a target of reducing the country’s deficit from 9.3 to 3 percent could be considered. He never asked her that directly in a meeting in Berlin last month, however, saying Greece had to commit itself to following the Troika’s demands first.
All the numbers are against the New Democracy Conservative leader Samaras, however, as data showed industrial output dropped 5 percent year-on-year in July with manufacturing slumping 7.8 percent as existing austerity measures stifled domestic demand and have worsened a five-year recession that has left nearly two million people without work and made the economy shrink by 7 percent with little hope of recovery for many years.
Greece’s union federation for public sector employees, ADEDY, says it is planning a general strike along with its private sector counterpart GSSE to protest the new measures. Strikes and protests that often turned into riots brought down the previous administration of then-PASOK leader George Papandreou, who is going to Harvard to teach government.