Archive for June, 2011|Monthly archive page

A day of no surprises

In News on June 29, 2011 at 3:41 pm

Today at 2pm (UK time), the Greek parliament voted in favour of the austerity measures, which are requested by the EU and the IMF as a condition to release the next instalment of the €110 billion bail-out that Greece received in May 2010. Without this payment, Greece would probably have to default on debt payments due on 15 July (the alternative would be to borrow from the international markets at very, very high rates).

In the 300-seat parliament, 155 MPs voted in favour and 138 against. In the run-up to the vote, members of the Greek government and administrators, as well as European officials have made dramatic political statements to heighten the sense of urgency and stress the need for an approval of the measures by the Greek parliament. George Provopoulos, governor of Greece’s central bank, said that a “no” vote would be suicide. The president of the European Council Herman Van Rompuy said “the impact of the Greek vote would be felt worldwide said”, while the economics Commissioner Olli Rehn said that Greece has two options “pass the mid-term package or default”. While Christine Lagarde, the new head of the International Monetary Fund, called on the Greek opposition party (New Democracy) to support the government in pushing through a new austerity plan. Finally, the deputy prime minister Theodoros Pangalos, continuing his dangerous scare propaganda declared: “A return to the drachma would mean that on the following day banks would be surrounded by terrified people trying to withdraw their money, the army would have to protect them with tanks because there would not be enough police.”[1]

However, anyone who knows the Greek political scene, knows that there was never an really issue of a “no” vote. Party discipline has been at the heart of the Greek political system and the new Socialist government secured a majority of 155 MPs out of the 300 parliament seats last Wednesday. There were really no surprises there. The only surprise today was a negative vote by a Socialist MP (Panagiotis Kourouplis, who was immediately expelled from the socialist party as a result). However, this was matched by a positive vote by Ms Elsa Papadimitriou, MP of the opposition New Democracy party (again, officially no longer belong to the New Democracy party whose official line was against the measure).

As the MPs were voting inside the parliament, there were violent clashes outside the parliament building in Syntagma (Constitution) Square. This is the second day of violent clashes, following yesterday’s demonstration and violence, as there is a nationwide 48-hour strike in opposition to the measures. According to eye witnesses, there was a unprecedented use of tear and gas stun/smoke grenades by the riot police, which created a cloud of chemicals in the centre of Athens, making it impossible for anyone to breathe. According to reports from the Red cross tent at Syntagma Square, there were over 100 people with respiration problems and 40 injured (burn, bruises etc). The riot police used tear gas indistinctively, targeting demonstrators (there were reports from a SKAI journalist that tear gas was fired within a coffee shop), as well as journalists and reporters.

What followed was the usual cat-and-mouse game, played by the riot police and the “hooded” rioters who threw sticks, stones and self-made bombs. There were some arrests and some people ended up in the hospital. The people in the hoods who caused the violence were not arrested. Riot police in Greece is well-known for its lack of training, absence of professionalism, aggressive arrests, abuse of power in general and excessive use of tear gas and den bombs. So again, no surprises there.

The Greek parliament’s approval of the austerity measures was welcomed by European leaders who sighed with relief and markets picked up. According to the common statement issues by the Presidents of the European Commission President Jose Manuel Barroso and the European Council President Herman Van Rompuy, “the country has taken an important step forward […] but also a vital step back – from the very grave scenario of default”. Again, no surprises there.

[1] Anyone how knows about the military dictatorship in Greece (1967-1974) knows about the tank which run over the entrance of the National Technical University of Athens killing  Greek students in 1973, and can understand that this statement will deeply anger many Greeks and that such words are simply fuelling an already very tense social situation in Greece.


Democracy is dead, long live economics!

In News on June 22, 2011 at 3:07 pm

Last night, the Greek Prime Minister George Papandreou gained a vote of confidence for his newly appointed cabinet. The majority was 155 out of a total of 300 MPs, which is all of the MPs of the Socialist Party. Mr. Papandreou was successful in consolidating his party after last week’s internal revolt and his back-and-forth politics into forming a government of “national unity” with the opposition party leader Mr. Antonis Samaras.

The approval of the cabinet means now that Mr. Papandreou can now more safely ask the parliament to approve the medium-term austerity programme which is demanded by the EU-IMF as a condition for releasing more funds to Greece. The austerity programme is to introduce huge spending cuts, tax inreases and a long list of privatizations. People will lose their jobs, families will be driven below poverty lines, retired people (who have worked all their lives and have been paying their welfare contributions) will see their pensions being reduced, employees will not be paid overtime or will see wage reductions, graduates will take jobs with fewer or no skill requirements, as these will be the only ones available, social and workers’ rights will be demolished and the country’s younger generation will flee to greener pastures abroad.

But it does not matter! Because Greece’s debt may be slightly reduced in five years’ time. And then, there will also be some kind of growth as well, say 0,6% of GDP. And the government’s deficit will possibly be reduced. And this is all that matters. Economic indicators are not here to serve society, they have a value of their own!. It does not matter if a whole country is experiencing de-development and going backwards and a generation is lost. It does not matter if the Greeks have been protesting against these cuts since 25 May. Because the people do not understand economics and Euro-politics and what matter is that the economic indicators are right. And in today’s world of neoliberal economics and coalitions of governments and bankers, this is all that matters. And if governments use their power to bypass people’s opposition, if they spray citizens with tear gas instead of protecting their right to work, if democracy get stumped in the way of economics, well that ‘s just a casualty.

What is wrong with Greece’s privatization programme?

In News on June 21, 2011 at 5:14 pm

The package of austerity measures that the Greek government will try to pass through parliament next week, includes spending cuts, tax increases and privatizations. All these measures are set as a condition by the EU and IMF in order for new funds to be released to Greece by 3 July.

According to the new medium-term programme, there will be a rapid reduction in hiring civil servants (for every ten civil servants retiring, one civil servant will be hired for 2011 – this ratio will change to 5:1 for each year till 2015). Civil servants will not see any wage increases, while their working hours will increase from 37,5 hours to 40 hours per week. 150,000 people will lose their jobs in the public sector, in a country where the unemployment has gone up to 16% in 2011. These changes will be accompanied by spending cuts in the provision of healthcare and a long list of public companies to be privatized.

According to the Mr. Papandreou’s privatization programme, over the next two years (2011-2012) the Greek government will be selling  the remaining stocks that the Greek states owns in the following companies: Hellenic Post Bank (34% of total stocks), National Lottery (100%), Greek Defence Systems (EAS) (99,8%), General Mining & Metallurgical Company (LARKO) (55,2%), Greek Agency for Horse-racing (100%), Greek Casino in Parnitha mountain (49%), Greek National Railway (OSE) (100%), Hellenic Vehicle Industry (72,6%), Greek Organization of Football Prognostics (34%) and Greek Petroleum (35,5%).

In addition, the government is planning to sell further stocks in the following companies. It will sell  the Greek state’s remaining stocks in the Hellenic Organization of Telecommunications (OTE), retaining only 6% of total stocks. It will sell 23,1% of 74,1% of stocks of the Piraeus Port Authority, 26,2% of its previous share of 77,3% of Agricultural Bank of Greece (ATE), 17% of its previous share of 51% stocks of the Public Power Corporation (DEI). It will also sell more than 40% of its stocks of Hellenic Posts, effectively losing control (it previously owned 90%), as well as 55% of its 65% stocks of Public Gas Corporation (DEPA) and 31% of its 65% stocks of National Gas Transmission System. Finally, the Greek government will be selling the old Athens airport in the Ellinikon area, as well as four Airbus planes. (Presumably the Parthenon, Delfi and Olympia will be sold in the 2013-2014 wave).

There are many problems with the Greek privatization programme. First and foremost, there is no guarantee that the Greek government will find any buyers. Second, it is unlikely that the prices at which the Greek companies will be sold, will be anything above a sell-out price. Thirdly, there is absolutely no guarantee that this privatization programme (of €50 billion) combined with the spending cuts will reduce the country’s debt. According to many economists, the Greek economy has now reached a point, where even if everything goes according to plan and better, the debt will still be at unsustainable levels.

Finally, the main argument in favour of privatizations is that inefficient companies can be run by the more efficient private sector, while the state sets and implements rules to safeguard the provision of these services to citizens. Can the Greek government act as a watchdog, and set and enact the necessary regulations, when it has been unable to collect taxes and fight corruption? Can it guarantee that whoever buys the Greek utilities will not increase prices and lower the quality of services to Greek citizens without any control? I am afraid the answer is painfully obvious.

P.S. For a Greek version of this article and a link to the actual austerity programme, please visit ddos.

What if Greece defaults?

In News on June 20, 2011 at 12:47 pm

Greek default a.k.a. Lehman brothers II? 

Eurozone ministers meeting in Luxembourg over the last couple of days, agreed on a second bail-out for Greece. They acknowledged the fact that Greece cannot borrow from the international markets and have on principle agreed on a second aid package. But they have postponed a €12 billion EU/IMF loan (and last payment of the €110 billion aid package which was agreed in May 2010) for mid-July, and on the condition that the Greek parliament agrees on the new austerity programme. Without this new loan, Greece will not be able to make debt payments. So, what Europeans in effect did was to create even greater pressure to the Greek government to approve the greatly unpopular measures, which foresees privatizations of €50 billion until 2015.

The greatest fear shared between market analysts and politicians across Europe is a Greek default. Earlier this week, as Greeks were demonstrating on the streets against the austerity measures and Europe’s leaders were indecisive regarding the form of the Greek bail-out, the fear of default spread across financial markets.

So, what if Greece defaults? First of all, there will be a shockwave spread in the banking sector in Greece and Europe. Greek banks will lose billions as they hold a great part of the Greek debt and they will immediately be downgraded by credit rating agencies. French and German banks will also lose billions of euros, as they are also greatly exposed to the Greek debt (€56 billion and €34 billion respectively). (Here there is an overview of which banks are exposed to the Greek debt). The greatest fear lies in the unknown. What if there is a so-called “Lehman Brothers moment”, when the financial markets panic and the lending taps are closed?

As Greece defaults, the perceived risk of Portuguese and Irish bonds will increase, which will lead to a massive sale of these assets by foreign investors. The same thing, to a smaller extent, will happen to the cost of borrowing for Spain and Italy, as doubts are increasing over about the sustainability of their debts. More importantly, the Greek default will have now set a precedent. So, other highly indebted European governments, also pressured by their electorates and public opposition, may start considering the option of default. It doesn’t matter if these governments would not actually consider this option. For the financial markets and the credit rating agencies, it matters that the option is now on the table.

The third repercussion of the Greek default will be that for the first time in the European Union’s history, European integration will unravel. European integration has stalled, has gone through periods of Eurosclerosis, has suffered from lack of political leadership, indecision and inertia. The European Union may be considered a two-tier, or even three-tier economic area, depending on how one reads the levels of cooperation between the countries, but never in its history has there been an actual “step back”. If Greece leaves the eurozone, European integration will have unravelled.

The consequences of a possible Greek default are the reasons why the Europeans reached an agreement on a second bail-out loan for Greece. However, postponing the last payment of the first bail-out and making it conditional on the present austerity programme is highly problematic. First, it creates huge pressures on the Greek government to pass a highly unpopular programme. Second, this will only represents a short-term solution. The magnitude of the Greek debt remains. The debt is now heading towards 153% of GDP. There are many economists who argue that the question of Greece defaulting on its debt is not “if” but “when” (whether now or in 2015).

The austerity programme which was agreed last year simply did not work. And why would it? How can a shock austerity programme, which depresses aggregate demand while the government cannot devaluate its currency, be successful? Unemployment has gone up to 16%. The Greek economy shrunk in 2010 by 4% and industrial production decreased by 11%. How can a new austerity programme, which will follow the same rationale work on an already depressed economy?

A three-level play

In News on June 19, 2011 at 1:58 pm

The Greek debts crisis is now unravelling in three different levels. The national level, the European level and the citizen level.

At the moment of writing, the Greek parliament is in its first day of a three-day debate, at the end of which the Prime Minister George Papandreou will ask for a vote of confidence of the new cabinet. The new cabinet was announced on 17 June, following two days of drama politics. One of the key changes was replacing the current Finance Minister Giorgos Papaconstantinou, with Evangelos Venizelos, which the Guardian described as “physically imposing presence”  (this apparently is a prerequisite for being Deputy Prime Minister, judging from the equally imposing Mr. Evangelos Pangalos). Mr. Venizelos is Mr. Papandreou’s longtime rival. He come from the Socialists’ “old guard” and was Mr. Papandreou’s opponent in the 2007 race for the party leadership. According some analysts, Mr. Papandreou forged an alliance with his “chief enemy”, with the aim of appeasing some members of his party who were opposing the new austerity programme. This reshuffle will presumably consolidate the Socialist party and will lead to greater support for the tough austerity measures. The hope is that the new government will win the vote of confidence (which is due on 21 June), and the new austerity programme will pass through parliament the week after.

At the same time, the Eurozone finance ministers are meeting in Luxembourg to discuss releasing a loan of up to €12 billion to Greece. This is the late payment of the €110billion EU-IMF aid package that was agreed in May 2010, without which Greece will not be able to pay forthcoming debt repayments. On 16 June, EU Commissioner Oli Rehn urged  Eurozone Finance Ministers to come to a “responsible agreement” on Greece’s bail-out. He also said that the Greek government should endorse the economic measures agreed.  On 17 June, the French President Nicholas Sarkozy and German Chancellor Angela Merkel agreed on principle that any extension of the maturities of the Greek bonds will be purely voluntary (the point of disagreement was the private banks’ contribution to the new aid package). Ms Merkel conceded to the demands of France and the ECB that the private banks’ contribution in the new bail-out package for Greece should be voluntary, she insists that it is “substantial” . However, while European frets, the financial markets jolt every time news were coming from Athens and Brussels. There are fears of a Greek default which could jeopardize the stability of the Eurozone. At the moment of writing, the next Eurozone meeting is 19-20 June is taking place, where it is expected that this agreement will be sealed off. The hope is that there will be an agreement and the new loan will be given to Greece.

Meanwhile, according to the latest poll, 47% of the Greeks are against the new austerity programme, which includes tax increases, cuts in civil servants’ wages and a long list of privatization. Since the bail-out, 400,000 have lost their jobs. Total unemployment is now 16%. Greece’s “indignant citizens” have been camping out in Athens’ central square (Constitution Square) since 25 May in protest against the government’s new measures. For some Greeks the hope is that their pension or their wage will not be reduced any further, that there will not be asked by their employer to work longer hours on the same wage, or that they will still have a job in a few months’ time. For the younger generation, there is no hope.

The politics of blame shifting

In News on June 18, 2011 at 5:42 pm

Governments are known to use tactics in order to circumvent public opposition. It is often the case that politics elites withhold important information from the public or delay the release of information to the media, with the aim of manipulating public opinion and tone down opposition and reactions. This manipulation of public information by elites is sometimes well-intentioned. It is not always the case that the public knows best, and citizens can be emotional about issues, where a rational approach is needed (see foreign policy). However, more often than not, governments exploit their strategic position as agenda-setters and regulators of information, and tamper with it to promote their own political agenda. This is exactly the game which  Deputy Prime Minister of Greece, Theodoros Pangalos had been playing for past eighteen months.

Ever since the magnitude of the Greek debt was revealed in October 2009, Mr. Pangalos has been making increasingly provocative public statements, referring to the Greek citizens’ responsibility for Greece’s debt crisis and current state of the economy. In a very characteristic statement, which has become an anecdote in the Greek media and blogs, he said “We ate it together”, where “it” refers to public money and “ate” is  slang for “spent”. The message which Mr. Pangalos is trying to convey is that Greek citizens have greatly benefited from a corrupt state and have thus contributed to the geometrical increase of Greece’s public debt. As he mentioned in the beginning of this week, if you can “find me a Greek public servant citizen who did not receive undeserved wages, benefits, and pay increases or a Greek who asked for a receipt each time he bought a product or used a service, I will make him a statue”.

What is infuriating about Mr. Pangalos’s public statements is not only his sarcastic tone and the fact that he completely dismisses the public and media outcry his comments provoke. It is that he systematically attempts to place the Greek citizen and the politician on an equal footing, vis-a-vis Greece’s present debt crisis. And as it seems, this motto is now being taken on by others who talk about the need of Greeks to accept some “responsibility for the causes of the crisis”.

Let’s make one thing clear: Greek citizens are not to be blamed for the state of the Greek economy and the magnitude of the debt. Not because they are model citizens. Far from it. Many Greeks have received overblown public wages, by virtue of being a member of the Socialist or the New Democracy party, rather than their merit and their qualifications. And as many, if not more, do ask for receipts and do not offer one when they provide their professional services. However, the Greek civic culture and the behaviour of the Greeks is not at trial here. It is government policy. Citizens do not issue government bonds. Citizens do not decide how many job vacancies will open in the public sector. The Greeks did not decide on the level of defence expenditure and the number of submarines and war planes to be bought from France and Germany. They did not contract companies in the name of the Greek state to build roads five times up the cost of European highways. Politicians did.

Of course, the aim of this blame-shifting, scare campaign is to spread fear and guilt to the majority of the population, so that austerity measures are accepted. However, when a quarter of civil servants have seen their salaries being reduced by 20% and may lose their jobs, when the number of Greeks out of work has increased by 40% from a year earlier (16% in total), while the political elite remains unpunished for well-known cases of corruption, these are dangerous games. Very dangerous indeed.

Eurozone ministers: What is the fuss about?

In Background on June 16, 2011 at 8:15 pm

On 14 June, the Eurozone ministers could not agree on the form of the second bail-out package for Greece. The contentious point was the role of the private investors in it. Germany insisted Greece’s lenders should swap their bonds for new ones with extended, seven-year maturities. This would allow plenty of time to the Greek government to implement the necessary reforms in order to lead the economy out of the recession and in a path of growth, which will allow it to borrow from the markets.

This was not accepted by the European Central Bank, the European Commission and France. The reason was that although Brussels would call this bond-swapping “reprofiling” of loans, the credit agencies would interpret this as a pure and simple default. The ECB, both in the words of the current President Jean-Claude Trichet as well as the likely next head of the European Central Bank, Mario Draghi, stood firmly against anything which could be seen by the markets as a default. It claims this would cause panic (see US 2008 collapse of Lehman Brothers) and have serious repercussions for European banks. On 15 June (day of general strike in Greece), Moody’s announced that it might review the ratings of France’s three largest banks (BNP Paribas, Societe Generale and Credit Agricole) because of their exposure to Greek debt.

Instead the ECB was promoting the so-called “Vienna initiative”. This is an agreement which had taken place in order to contain the debt crisis in Eastern Europe in 2009. In effect, foreign banks had agreed not to cut their exposure to the region and run, and thus there was no spread of the  financial contagion in Central and Eastern Europe. In this scenario, any bond-swapping is purely voluntary.

The agreement among Eurozone ministers is now on the way. This was partly facilitated by the IMF’s decision to give the next payment of Greek aid of €12 billion on 29 June, on the basis of a “promise of future EU funding rather than any concrete commitments” (BBC news).

Mr. Papandreou’s next step

In News on June 16, 2011 at 7:00 pm

For the past twenty-four hours, the Greek political arena was the scene for a soap-opera. It all started yesterday with Mr. George Papandreou’s effort to create a “national unity” government, his offer to even step down if needed, and his change of heart later on that evening. The drama continued today with the emergency convention of the Socialist MPs, who were reported to challenge the leadership of Mr. Papandreou. Sure, there were two resignations (George Floridis and Hector Nasiokas), but as the two Socialist MPs also stepped down from parliament, the Socialists’ majority in parliament was not jeopardized. However, the rumours went as far as to predict party elections for a new Socialist leader on the same day.

Meanwhile, the opposition party was holding its own emergency meeting, while the smaller parties (Greek Communist Party – KKE,  Coalition of the Radical Left – SYRIZA, People’s Orthodox Rally – LAOS) were criticizing the two large parties for lack of initiative and leadership. Naturally, the Greek media – not really known for their sober and analytical news reporting – were magnifying every little statement made by Greek politicians, while frequently referring to the “disaster” which was looming for the “ungoverned ship” (Greece, that is).

By late afternoon, the ship had not sunk (at least not in political terms) and Mr. Papandreou reiterated his will to form a new cabinet. Was Mr. Papandreou playing some kind of poker game with his European partners? Maybe, given that on Tuesday the Eurozone ministers had not decided on the details of Greece’s next bail-out, while the path seems (more) clear this afternoon (See BBC news). Was he orchestrating some sort of communication show to increase pressures on his party to accept the austerity package? Maybe, given that by this morning there were talks of elections within the socialist party, while by this afternoon he was announcing the new cabinet and the government’s leading ministers were giving him their support. Was he just doing bad politics? Probably. The answers to these questions are unclear but also unimportant.

Greece’s debt problems are not only present but urgent. The medium-term programme which foresees privatizations and public spending cuts remains a condition for the next IMF-EU payment, which is due on 29 June. And the protesting Greeks are still on Constitution Square opposing it. They may be fewer today, after the riots which took place yesterday, but there will definitely be more over the weekend.

Mr. Papandreou could attempt to go to Brussels and try to renegotiate the terms of the austerity package. However, it is highly unlikely that the IMF-EU will accept anything less that was has already been agreed upon, especially given the IMF’s bias in favour of liberal economics and the EU’s recent obsession with fiscal discipline.

What he could try to do, is get the Greek citizens on his side. And there is only one way to do this: to stop the discrimination between Greece’s political elites, their surrounding journalists and businessmen (the “mainstream”) and average citizens vis-a-vis the rule of law and the burden of the austerity package. He should prosecute ministers and members of his party who have abused their position and used public funds for their own personal gain, press charges against all those businessmen and professionals who systematically evade taxes, freeze their Swiss bank accounts, and confiscate their assets.

Then maybe, he will have some chance of going through the austerity programme without further alienating the Greeks and increasing the chasm between Greece’s political elites and citizens.

Comedy or ancient tragedy?

In News on June 16, 2011 at 12:22 pm

On 15 June, while the Greeks were demonstrating outside the parliament building and the police were releasing tear gas by the dozens in the streets of Athens, a peculiar play took place, with Prime Minister George Papandreou in the leading role.

At 1pm, he visited the President of the Republic, Karolos Papoulias to communicate to him the need for a “national unity” (or universal) government, which would be formed from representatives from all political parties and would thus have support across the political spectrum. Soon enough, he was in private talks on the phone with opposition leader Antonis Samaras. Allegedly, the Prime Minister also offered to step down himself, if this was what was needed to secure the consent for the “national unity” government. Mr Samaras was reported to have agreed in principle, on the condition that the medium-term programme (new austerity package) is renegotiated in Brussels.

Then, in the early evening Mr. Papandreou gave a national address, claiming that there will be no national unity government, as there were press leaks by the opposition during their private communication. He announced that he would be forming a new cabinet, which will be put to a vote of confidence in the parliament on Sunday, 19 June.

Presumably, what triggered Mr. Papandreou’s moves was the resignation of one of his MPs (George Lianis) on Tuesday. This decreased the majority he had in parliament (he now has the support of 155 MPs out of a total of 300) and increased fears that he might be facing revolt in his party over the austerity programme. These fears seem to be more real than not. As this piece is written, and according to the Greek media, the Parliamentary Group of the Socialist Party are convening. Some ministers are reported to call for the resignation of the Finance Minister George Papaconstantinou, while others go as far as to challenge the premiership of Mr. Papandreou. Announcements are expected to be made around 4pm (Greek time).

In the opposition camp and following the failed talks and in a predicted populist move, Mr Samaras has called for general elections. The New Democracy parliamentary group are expected to convene later on this evening.

At the same time, the Europeans are engaged in their own negotiations  on the Greek debt crisis. Having failed to agree on the specifics on the second bail-out package of Greece on Tuesday evening, the Eurozone ministers are closer on reaching an agreement today (16 June), according to the EU Observer and the Financial Times. The main point of disagreement is how private creditors will contribute to a new Greek bail-out. While Germany wants Greece’s lenders to swap their bonds for new ones with extended maturities, the European Central Bank, the Commission and France are against any move which may be interpreted by the markets as “non-voluntary”.

Meanwhile, the financial markets mirror the panic. On 13 June, Standard & Poor’s downgraded Greece’s rating from B to CCC. The new rating places Greece at the very bottom of the 131 states that have a sovereign debt-rating (lower than Pakistan, Ecuador or Jamaica. Following the street riots on 15 June, yields on Greece’s 10-year bonds reached a record high of 18.4%. This morning financial markets had fallen further as investors sold shares, amidst fears of Greece’s default. European markets opened lower, with London, Paris and Frankfurt initially down more than 1%.

It all has to be resolved as soon as possible, ahead of the Eurozone ministers’ next meeting on Sunday, 19 June, ahead of the European summit on 24 June and certainly before 29 June when the next IMF payment is due .

And there is no doubt this back-and-forth Greek drama politics is simply fuelling the overall uncertainty which surrounds the country’s future.

Athens, 15 June

In News on June 15, 2011 at 5:31 pm

Today, 15 June 2011 is the day when the Greek Parliament debates on the new austerity measures (medium-term programme) requested by the EU and IMF in return for a second bail-out package. The austerity programme (€28 billion in cuts)  is to be implemented from 2012 to 2015 and includes a list of privatizations and tax increases. These measures are demanded by the EU and IMF in return for the release of another €12billion, which will allow Greece to pay off maturing debt. Today was also the day on which the trade unions (both of the private and public sectors) had called for a general strike, the third in 2011.

Since this morning, thousands of Greeks were gathering in Athens’s central square (Constitution square) in front of the parliament. At the same time, the Police’s special force units or Public Order Restoration units (MAT) were barracking themselves and the parliament building, behind plastic protective walls and iron barriers.

The protest started peacefully with the demonstrators shouting “bread, education, freedom”, the same phrase which was shouted in the falling days of the Greek junta (1967-1974). But soon enough there were clashes between police and rioters, who threw Molotov bombs. Naturally, the police replied with tear gas and flash bangs.

There was a great debate in the Greek media about whether the rioters were citizens with seeking to express themselves violently, anarchists, hooded thugs or provocateurs, i.e. men who were intentionally placed among the demonstrators (by the government? By the police?) with the aim of causing trouble and in effect breaking up the demonstration. Photographs released this morning by several Greek blogs show hooded youngsters among policemen – a common picture in previous Greek demonstrations – and men carrying stick poles under the eyes of special forces units (See here and here). The police denies the accusations.

Whatever the truth is, there was one result. By 4pm Greek time, the centre of Athens was soaked in tear gas, there were eight people hurt (the total toll by now is twenty nine), the Constitution square was empty, while rioters and police were playing hide-and-seek in the streets leading to the Constitution Square. The demonstration was broken up.

Meanwhile, Prime Minister George Papandreou is holding talks with the President of the Republic Karolos Papoulias and the opposition leader Antonis Samaras  with the aim of forming a government of national unity. The Greek media is filled with special reports about the new government’s possible ministerial posts and guesses on whether the new “unity” government will last six months or three years (the full length of the austerity programme). Presumably, the Greek PM seeks to secure consent across the political spectrum in order for the medium-term programme to be implemented in full.

The question arises: What is the value of a democracy when the police are guarding the parliament with iron walls and barricades, in order to protect it from the demonstrators? What is the quality of a political system where its political elites protected by armed forces conspire to go ahead with the exact programme which the majority of Greeks oppose? Is this bail-out worth this degradation of Greek democracy?

P.S. More pictures from today’s demonstrations (from indymediademotix, and the Boston Globe).