Samaras Says Greece Needs More Time But Won't Ask

ATHENS – With new estimates that a five-year-recession worsened by austerity measures demanded by international lenders has created a $37 billion gap in recovery plans, Prime Minister Antonis Samaras has given Greece’s creditors a letter explaining that the country needs until the end of 2016 to find ways to make another $15 billion in cuts they have insisted upon to keep rescue loans coming.
Samaras has been reluctant to formally ask for a renegotiation to the terms of a delayed second bailout of $173 billion that comes with more of the same conditions – pay cuts, tax hikes, and slashed pensions – attached to a first series of $152 billion in lifeline loans. The newspaper Kathimerini reported that he gave officials of the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) the letter detailing the devastating effects of the recession that has put nearly 1.1 million people out of work, shrunk the economy by 6.7 percent and is closing 1,000 businesses a week.
Despite that evidence, the Troika wants the same measures that have pushed many Greeks toward impoverishment so that foreign banks and investors will get paid back first. Samaras offered to speed the pace of some reforms but stopped short of asking for two more years to meet the fiscal targets, the newspaper wrote, although he seemed to be setting the table to ask for a delay at some point after Greece has implemented more of the measures the Troika wants.
Samaras, the New Democracy Conservative leader, will meet with the leaders of his two coalition partners, PASOK Socialist leader Evangelos Venizelos and Fotis Kouvelis of Democratic Left, on July 30 to finalize a package of $15 billion in savings for 2013 and 2014 after failing earlier to reach an agreement. In his meeting with Troika officials, Venizelos – a former finance minister who imposed big tax hikes on Greeks – indicated that he, too, has changed his mind and that Greece needs additional time to do what the Troika demands. He and Kouvelis are reportedly opposed to more cuts in pensions but did not offer any counter solutions to close the budget gap.
One way for Greece to close the $37 billion hole in its revenue shortfall is to impose big losses on the ECB and push Greece’s debt onto taxpayers in the other 16 countries of the Eurozone using the euro as a currency, a volatile dilemma for political leaders who would be asking their citizens to pay for Greece’s excessive spending to write down the country’s debt, rewarding profligacy.
According to Reuters, the ECB and national central banks are considering taking major losses on the value of their bond holdings in a bid to reduce Greece’s debts by 70 to 100 billion euros, or $86.2-$123.2 billion. Venizelos earlier this year stiffed private investors for 74 percent losses – including small bondholders through the Diaspora who had put their savings into helping Greece. That wiped out $134 billion in Greek debt but was not enough as the country is drowning in $460 billion in debt caused primarily by alternating New Democracy and PASOK governments over the previous 40 years packing public payrolls with hundreds of thousands of needless workers in return for votes.
The ECB and Eurozone national central banks hold some 52 billion euros ($64 billion) in Greek government bonds while another 160 billion euros ($197.1 billion) is owed Eurozone governments in loans dating from 2010 and a second bailout package earlier this year from the European Financial Stability Facility (EFSF.) The IMF has also committed more than 27 billion euros, or $33.26 billion.
With the numbers stacking up against Greece, pressure is building on the country to leave the Eurozone and be left on its own. “One ought to as soon as possible find a way to throw Greece out of the Eurozone with as little damage as possible,” Latvian Finance Minister Andris Vilks told state radio. Citizens in his tiny country are helping pay for Greece’s debt and he said they are weary of it.
(Sources: Kathimerini, Reuters, Wall Street Journal)