ATHENS – Even before the dust settled down from the appointment of a new interim Prime Minister, Lucas Papademos, and a coalition cabinet charged with pushing through the Parliament a new bailout of $157 billion from international lenders and more austerity measures, Greek leaders have been told they must issue written guarantees.
That came from the Troika of the European Union-International Monetary Fund-European Central Bank which is going to put up the money in addition to a first bailout of $152 billion that failed because the required pay cuts, tax hikes, slashed pensions, and coming layoffs of thousands of workers has created a deep recession because Greeks have nearly stopped spending. Papademos said the temporary government would act on its promise to pass the bailout and tough measures.
The newspaper Kathinmeri said the news came from IMF official Pangiotis Roumeliotis, Greece’s representative there, who was in the running to be the country’s interim leader. He reportedly said the Troika is demanding five separate letters from the country’s political leaders, confirming their acceptance of the terms of a new debt deal reached last month in Brussels, that also allows Greece to write off 50 percent of much of its debt.
According to Roumeliotis, The Troika is insisting on letters signed by Finance Minister Evangelos Venizelos, Greece’s central bank governor Giorgos Provopoulos, Papademos and one each signed by the heads of the two main parties, Socialist PASOK leader George Papandreou and conservative New Democracy leader Antonis Samaras. That puts Samaras in a tough spot because during negotiations to find a new Prime Minister and form a cabinet that will serve until elections in February, he refused to sign, saying his word should be good enough.
Roumeliotis told Kathimerini that he believed Samaras would change his mind because the Troika is listening to the New Democracy’s leaders concern that what Greece needs isn’t more austerity but measures to grow a shrinking economy. That may be beyond the charge of the interim government which is made up of leaders from the still-dominant PASOK Socialists, New Democracy, and the Right-Wing LAOS party that must work together and put aside a chasm of political ideologies.
Roumeliotis told the paper that if not enough investors and banks agree to give Greece a 50 percent discount that the plan could be undercut and re-evaluated, possibly jeopardizing the deal. His remarks came after Papademos, a former European Central Bank Vice-President and an economist who doesn’t belong to any political party, spoke by phone with French President Nicolas Sarkozy, German Chancellor Angela Merkel, and other European leaders still anxious that Greece could possibly default and threaten the underpinnings of the Eurozone, the 17 countries that use the euro as a currency.
Sakorzy and Merkel are insisting Greece stick to its word on the deal they helped hammer through a reluctant EU so that Greece could keep being funded, including a delayed $11 million installment needed to keep paying workers and pensioners.