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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.

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