In Greece, debt deal gets a mixed reception
Greeks woke up Tuesday to the news that their country will likely avoid defaulting on its debt mountain next month and that the euro should remain their currency, at least for the time being.
However, any relief that may have been engendered by the early morning decision by the 17-nation eurozone to back a euro130 billion ($170 billion) rescue, was offset by the grim reality that Greece faces many more years of sacrifice after a grueling 24 months of austerity measures that have contributed to record high unemployment and at least four years of recession.
“I don’t see (the agreement) with any joy because again we’re being burdened with loans, loans, loans, with no end in sight,” Athens architect Valia Rokou said.
The agreement in Brussels gives Greece its second financial lifeline in less than two years and the hope is that the deal will give the country the breathing space to enact widespread reforms and set it back on a path to growth.
Greece has been surviving since May 2010 on a first euro110 billion ($146 billion) batch of loans from the eurozone and the International Monetary Fund.
As well as securing another deal with its European partners and the IMF, Greece is hoping to get its private creditors to agree a massive writedown in the holdings of their Greek debt. Banks, pension funds and other private investors are being asked to forgive some euro107 billion ($142 billion) of the total euro206 billion ($273 billion) in devalued Greek government bonds they hold.
Private bondholders will trade their bonds with new ones carrying much longer maturities and lower interest rates _ an annual 2 percent by 2015, 3 percent to 2020 and 4.3 percent after that.
“It’s not every day that euro100 billion in public debt is written off, or loans for euro130 billion agreed,” Ta Nea newspaper said in an editorial. “There will be new sacrifices and difficulties, particularly for middle and lower earners. We must hope that this new period will become an opportunity for growth and better prospects.”
Without either aspect of Tuesday’s agreement, Greece would have soon been forced to default on its debts _ halting pension and civil servant salary payments. In all likelihood, Greece would have had to leave the common European currency it joined in 2001.
“I feel relieved to start with, because my country has escaped the immediate danger it faced,” said Athens lawyer George Sabalos, 40. “But I’m also troubled by our partners’ demand that the country’s constitution should be modified as part of the guarantees they are seeking, because I believe that is a rather excessive demand that goes against the principle of solidarity.”
And Greek unions fiercely oppose further austerity measures that accompany the second bailout, and have called a protest rally outside Parliament in central Athens on Wednesday.
Under new legislation to be tabled later Tuesday, private sector employees will be forced to accept further salary cuts as a result of the minimum euro751 ($996) monthly wage being cut by 22 percent. Pensions will also be reduced.
“Workers in our country refuse to accept the barbarity of the tougher neoliberal measures that have been extortionately imposed by our creditors, and that is why they will continue and step up their struggle … to block the destruction of our society,” the main GSEE private sector union said in a statement Monday.
GSEE and its public sector counterpart, the ADEDY, have staged a series of general strikes over the past two years. Many have turned violent, and as Greek lawmakers debated new austerity measures on Feb. 12 extensive rioting saw dozens of businesses in central Athens burnt and looted.
There workers died in an Athens bank torched by rioters during a protest in May 2010.
Greek stocks opened lower Tuesday, and were 1.0 percent down in early midday trading. However, they’ve been enjoying big gains over recent weeks on the expectation that the bailout would be secured.