Papademos Tells Greeks: Austerity or Chaos

ATHENS – With Greece on the brink of default unless it approves new austerity measures that could deepen a recession now in its fifth year, interim Prime Minister Lucas Papademos told lawmakers, including a growing number of rebels who oppose the terms dictated by international lenders, that the country has no choice and rejection would lead to chaos. He gave the same message in a televised address to the Greek people, who have been buried under two years of pay cuts and tax hikes he said were necessary for a first bailout from the Troika of the European Union-International Monetary Fund-European Central Bank of $152 billion and that a second bailout of $169 billion would not be approved without approval of more austerity measures, including a 22-32 percent reduction in the minimum wage and the layoffs of 15,000 workers this year and another 135,000 within three years. He said Greece faces a “vortex” of recession if the package is defeated.
Parliament will vote on the measures late in the day on Feb. 12 and the Troika has warned the money pipeline will be shut off if the deal is rejected. Papademos, in stark and emotional terms, said he knows he’s asking Greeks to endure more hardship but that the alternative is worse. “We realize this program entails painful sacrifices for the Greeks, but a default would condemn Greece to an uncontrolled adventure,” said Papademos, a former ECB Vice-President whose coalition government was shaken further with the defection of the far Right-Wing LAOS party which objected to the terms, leaving him with just holdover ministers from the former ruling PASOK Socialists and their bitter rival New Democracy conservatives who vowed to oppose austerity but have adopted it.
Papademos said: “We look at the Greek people in the eyes with full realization of our responsibility. This program will secure conditions of safety, confidence and restore the competitiveness of our economy. It will see the country return to growth, probably in the second half of next year.” Finance Minister Evangelos Venizelos earlier had warned that unless Parliament goes along that Greece could be forced out of the Eurozone of the 17 countries using the euro as a currency and be forced to go back to its ancient drachma and catastrophe. Bitter arguments preceded a consensus from the coalition before LAOS defected, mostly over saving pensions from budget cuts, but the Troika said Greece now must make $430 million in cuts in other areas, and some analysts fear more austerity will lead to further falling tax revenues and need for more aid or another bailout. Venizelos, confirming estimates from EU officials, said even with the bailout that the country needs another $19.8 billion to rescue the country’s banks from collapse.
VOTE YES OR DEFAULT
Papademos amplified that and said, “The agreement for the new program has the support of the country’s two main parties and secures the future of our country in the Eurozone. It also reflects the extreme conditions of need our country lives in.” He said if Greece defaults it would create chaos and that the country has to obey the Troika or else. “This is the fight of our generation. It would be the biggest defeat of post-1974 Greece if this country were to default and drop out of the Eurozone, when countries far poorer than us are making a hard effort to enter the euro. We will not emerge from the crisis without sacrifices. What is patriotic today is not drop our shields but make the correct decisions that enhance our position in Europe and the world. This is absolutely necessary for us to protect our national interest.”
He said it will be a long road to recover. “It will not end within just one year. It will require a long effort and cooperation of political forces. But above all, it will require faith in our abilities,” he concluded. Despite his pleas, more Members of Parliament joined a list of government ministers quitting in protest, although the coalition still easily controls a majority of lawmakers and is expected to prevail. Labor unions held two days of strikes and rallies and protests are expected to grow as the Parliament debates and votes.
Socialist leader George Papandreou, who resigned as Prime Minister on Nov. 11, 2011 after more than 18 months of protests, strikes and riots against the austerity program, said he will expel any lawmaker from his party who votes against the measures, as did New Democracy leader Antonis Samaras, who is pushing for elections to be held quickly because his party has a runaway lead, although not enough support to rule without forming another coalition. “We have to vote Yes, not because it is pleasant but because it will give Greece some time to stand on its feet,” said Papandreou.
Bitter arguments preceded a consensus from the coalition before LAOS defected, mostly over saving pensions from budget cuts, but the Troika said Greece now must make $430 million in cuts in other areas, and some analysts fear more austerity will lead to further falling tax revenues and need for more aid or another bailout. Venizelos, confirming estimates from EU officials, said even with the bailout that the country needs another $19.8 billion to rescue the country’s banks from collapse.
Samaras said while he supports the measures, he doesn’t believe in them but insisted they be approved. “The recipe of the agreement was wrong,” he said, but added that, “The loan package is the start for us to put this chaos in some order. It will allow the country to rid itself of 85 billion euros of debt,” a reference to a write down of as much as 70 percent of Greece’s debt under a so-called Private Sector Involvement with creditors as part of the second bailout that hinges on approval of more austerity. Without the bailout, Greece will be unable to pay workers and pensioners or an $18.2 billion loan installment due March 20 and Papademos said the country would faces shortages in fuel and medicines.
In an interview with the newspaper Imerisia, Deputy Finance Minister Filippos Sachinidis described the catastrophe he believes Greece would suffer if it failed to meet debt repayments due next month. “Let’s just ask ourselves what it would mean for the country to lose its banking system, to be cut off from imports of raw materials, pharmaceuticals, fuel, basic foodstuffs and technology,” he said.
On the second day of a 48-hour protest strike, about 50 Communist party activists draped two large banners on the ramparts of the Acropolis, reading: “Down with the dictatorship of the monopolies (and the) European Union.” About 7,000 protesters gathered in Athens, police said, but there was no repeat of a Molotov Cocktail-tear gas battle between anarchists and riot police of the day before.
Papandreou admitted the pressure was intense. “I’ve lost friends, my family suffered, I gave up my office, I was insulted, vilified, like no other politician ever was in this country,” he told PASOK’s parliamentary group. “Still, all that is nothing compared with what our people will suffer if we fail to do the right thing,” he said. PASOK has fallen from dominance to 8 percent support, fifth among Greece’s political parties.
The chief negotiator for private creditors in the debt swap deal, Charles Dallara, urged a ‘Yes’ vote, saying the deadlines allowed “no room for slippage.” Dallara, who is managing director of the International Institute of Finance (IIF), said private creditors were committed to a voluntary agreement and that he expected a “very high participation rate.” He told Kathimerini newspaper that, “It is important for lawmakers to understand what is at stake.”