When they see that their family budget or their personal budget is affected, then they react.” So a broader backlash could be yet to come
Rattled EU leaders will wrangle Thursday over how to resolve a Greek debt crisis that has shaken the euro and underscored the interconnectedness of the global economy. U.S. and European shares rose on hopes for a rescue plan that might take pressure off a host of eurozone stragglers, including Portugal and Spain.
But German officials said Wednesday there was no urgent need for a bailout at the moment and that “no decision on such help” is imminent. They also said EU rules prohibited them from guaranteeing another country’s debts.
“Of course, we are running through worst-case scenarios,” a German official said on condition of anonymity. “Greece has to present a credible volume of cuts. Agreement on that would be an important signal from tomorrow’s summit.”
Greece has come under intense EU pressure to slash spending after it revealed a massive and previously undeclared budget shortfall last year that continues to rattle financial markets and the euro, the currency shared by 16 EU members. Its deficit spiraled to above 12 percent of economic output – more than four times the eurozone limit – in 2009.
Prime Minister George Papandreou’s new government has announced sweeping spending cuts that will freeze salaries and new hiring, cut bonuses and stipends and increase the average retirement age by two years to 63. The government also announced new taxes, which it insists will increase the burden on the rich but safeguard the poor.
Greek Prime Minister George Papandreou, who was in Paris Wednesday to meet French President Nicolas Sarkozy, insisted Athens is not asking for a bailout.
“We have not asked for help,” he told Greek reporters in a briefing after his meeting with Sarkozy. “We have said that we just want you to support our will, the credibility of our country in the implementation of this program.”
Speaking earlier, just after his meeting with Sarkozy, Papandreou insisted that “We are absolutely decided that the stability program will be implemented in every measure.”
“We are ready to take any necessary measures to make sure the deficit goal is met,” he said.
Papandreou has faced pressure from unions, with civil servants walking off the job Wednesday in the first tangible widespread backlash against the new austerity measures.
“It’s a war against workers and we will answer with war, with constant struggles until this policy is overturned,” said Christos Katsiotis, a representative of a communist-party affiliated labor 강남 안마 union.
Yet despite the harsh rhetoric, turnout for demonstrations was relatively low, with less than 10,000 strikers and pensioners braving windy, drizzly weather in Athens. There was only one reported incident of mild tension, when police used a small amount of tear gas to stop strikers from using a garbage truck to break through a security cordon and join the main demonstration. But the incident was quickly over, and the march ended peacefully. Another 3,000 people showed up for two rallies in Thessaloniki, Greece’s second-largest city.
Although a much broader strike is planned for Feb. 24, in a country that has seen tens of thousands of people take to the streets in the past, it was an indication that many Greeks realize urgent action is needed to save the economy, no matter how painful.
“In general, there’s a dynamic developing in favor of the implementation of measures because it’s clear that the country is on the verge of bankruptcy, and if this negative dynamic isn’t controlled, we’re going to pay a huge social and financial price,” said political analyst and publisher Giorgos Kyrtsos.
Recent opinion polls have shown widespread support for freezing the pay of the country’s roughly 27,000 civil servants – whom many consider to be cosseted with various stipends, bonuses, chances of early retirement and lifetime job guarantees.
One weekend newspaper survey showed 70 percent of Greeks backed Papandreou’s call to cut civil servants’ pay and perks, although they opposed measures that would affect them individually such as new taxes or a higher retirement age.
“This is a Greek phenomenon,” Kyrtsos said. “Everyone accepts the measures that don’t affect them. When they see that their family budget or their personal budget is affected, then they react.”
So a broader backlash could be yet to come. The Feb. 24 strike promises to be broader than Wednesday’s, with both civil servants and private-sector workers walking off the job. Taxi drivers have declared a separate strike, for Thursday.
“We will have to wait to see how public opinion develops and how the government reacts to the first negative opinion polls,” Kyrtsos said.
Papandreou’s Socialists came to power last October and enjoy a strong majority of 160 seats in the 300-member Parliament, compared to the conservative opposition’s 91. The government has already faced down a protest by farmers, who demanded higher subsidy payments and staged tractor blockades on Greek highways for nearly three weeks.
European governments were initially reluctant to dig Greece out of a debt crisis it created itself – but now appear ready to help after market concerns intensified in recent days, dragging the euro down to an eight-month low against the U.S. dollar and hitting stocks worldwide.
The head of France’s national assembly, Bernard Accoyer, said Wednesday that European countries needed to show solidarity with Greece.
“The reality is obvious to everyone. The issue is not to let Greece go bankrupt,” he said.
European stocks closed up, and the spread, or interest rate difference, between Greek and benchmark German bonds narrowed, indicating less fears of Greek default in the bond market.
Markets are looking for more from EU leaders – a concrete plan on what EU nations would do if Greece were near default, which would hurt the euro, harm Europe’s already battered banking system and raise borrowing costs for governments across the continent.
Stephen Lewis, an analyst at Monument Securities, said financial markets “are taking it for granted that support will be forthcoming and would probably react negatively if the summit’s outcome fell short of expectations.”