ATHENS – After weeks of anguish, Greeks found out that international lenders providing the country with a series of bailout loans will release a delayed $11 billion installment needed to keep paying workers and pensioners, but it curiously did little to relieve growing fears that the cash-strapped country can’t stay afloat even as a coalition government already caught in political infighting struggles to keep the money coming. Finance ministers of the Eurozone, the 17 countries using the euro, gave Greece the money it needs to stay afloat for now, but left it to leaders of the European Union to try to find an answer to the imploding economies of a number of countries.
“We made important progress on a number of fronts,” Eurozone chief Jean-Claude Juncker insisted nonetheless. “This shows our complete determination to do whatever it takes to safeguard the financial stability of the euro.” EU Economic and Monetary Affairs Commissioner Olli Rehn said Eurozone nations needed to work on many financial issues at once to ease global pressure on their currency. “There is no one single silver bullet that will get us out of this crisis,” Rehn told reporters.
Left unresolved, even as the scale of the EU economic crisis has pushed Greece off the top of the agenda, is how to beef up the European Financial Stability Facility (EFSF) from its current near $600 billion to a target of $1.34 trillion to save the Eurozone and the euro. Dutch Finance Minister Jan Kees de Jager said investors had appeared less eager than originally anticipated. “It will be very difficult to reach something in the region of a trillion. Maybe half of that,” he said. Overwhelming the EU is the spread of the Greek contagion to Ireland, Portugal, Spain and Italy, countries whose economics are too big to be bailed. Greece is getting a $152 billion bailout while a second one of $175 billion is pending, but that depends on interim Prime Minister Lucas Papademos ramming through more pay cuts, tax hikes, slashed pensions and thousands of layoffs, measures that have created more than 18 months of protests, riots and strikes, including a general strike set for Dec. 1. “We have the necessary political consensus, we have the necessary national unity and the national commitment and determination to go ahead,” Finance Minister Evangelos Venizelos said.
While the strange coalition of former ministers from the former ruling PASOK Socialists, Conservatives from New Democracy, and the far Right-Wing LAOS make up the government that will rule until elections on Feb. 19 and control the Parliament, Papademos is struggling to keep them from battling each other, including within PASOK, as candidates jockey for position to get the nomination to run for Premier. Sources told the Athens newspaper Kathimerini that Papademos has expressed concern about the disagreements between ministers and what impact this might have on his government’s attempts to meet the targets set by Greece’s lenders. They said that Papademos is less concerned about squabbling between cabinet members from the three parties taking part in the interim government than between ministers from PASOK.
Another stumbling block remains. The second bailout includes a provision that would let Greece write off 50 percent of much of its debt, but that depends on agreements from the banks and investors lending Greece the money, and no resolution has been found yet. The negotiations are being conducted at a bad time for Greece, following a negative forecast by the Organization for Economic Cooperation and Development (OECD) and an even gloomier report from Citigroup which said Greece, in its fourth year of a recession, won’t get out until at least 2015. While almost all reports on Greece for 2013 forecast a return to growth, Citigroup expects the economy to shrink by 3.1 percent of Gross Domestic Product that year, after a 5.6 percent fall this year.
Citigroup further anticipates the jobless rate to soar to 21 percent by 2013 and the budget deficit to amount to $28.9 billion next year and $15.7 billion in 2013. The public debt, now at about $460 billion, will still be $397 billion in 2012 and $405 billion, or 150.9 percent of GDP, in 2013, a deficit from which no country has ever survived without defaulting.
(Sources: Kathimerini, Reuters, AP)