Papandreou: We Don’t Get No Respect

Battered at home and throughout Europe, Greece deserves some respect for its efforts to overcome its economic crisis, Prime Minister George Papandreou said, asking for European Union leaders to find a “definitive solution” when they meet in Brussels on Oct. 23 at a summit that is critical to the country’s future. “This national battle has been recognized by everybody,” Papandreou said in Brussels. “We are a proud people. We deserve this respect,” he said.
His remarks came after they put off decisions at a meeting to consider how much of a loss investors and banks will take in Greece after putting up $152 billion in a series of emergency rescue loans including the Troika of EU, International Monetary Fund and European Central Bank to keep Greece from defaulting, although it is technically bankrupt now. “We want to lessen the burden of the debt, a solution that will re-establish credibility,” Papandreou said.
EU leaders admitted the losses, or a so-called “haircut” will probably hit 60 percent or more, far above the 21 percent agreed up on in July when the leaders of the Eurozone, the 17 countries using the euro as a currency, devised a second bailout of $157 billion that hasn’t been implemented yet as the Troika awaits to see the effects of waves of pay cuts, tax hikes, slashed pensions, layoffs and delayed efforts to go after tax evaders costing the country $40 billion a year, and implementation of a privatization program to raise $71 billion.
Greece wants the investors to accept the losses voluntarily, but some have been wary because Greece’s debt of $460 billion is approaching 160 percent of Gross Domestic Product and there are fears they may lose everything. “This debt is onerous and must lighten for us to breathe again,” Papandreou said. He’s not getting much respect in Greece, where there are nearly daily strikes now across the board in many sectors, as well as repeated demonstrations and sometimes violent protests, none of which have made him veer from the course of austerity although it has created a deep recession of 16 percent unemployment and the closing of more than 100,000 businesses.
Papandreou told a news conference after the EU talks ended that Greece needed a “viable solution to the Greek debt,” especially on the participation by private Greek banks, pension funds and insurance firms who hold nearly 30 per cent of central government debt – and losses there would have to be offset by the government, which may have to privatize them. Another 30 per cent held by the IMF and ECB could not be restructured for “political and legal reasons,” former ECB Vice President Lucas Papademos wrote in the To Vima weekly newspaper. “As a result, only around 40 per cent of Greece’s total public debt, held by foreign private investors, could bring net economic benefits. A 50 percent haircut will reduce the total debt by about 20 per cent,” Papademos said.