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| From left, Christine Lagarde, managing director of the I.M.F.; Prime Minister Jean-Claude Juncker of Luxembourg; and Olli Rehn, the European monetary affairs commissioner, at a news conference on Tuesday. |
February 21, 2012
Growing Air of Concern in Greece Over New Bailout
By RACHEL DONADIO
ATHENS — Even as the European Union signed off Tuesday on a sweeping new arrangement to help avert a Greek default and stabilize the euro, many people here on the streets saw no end to their country’s woes.“They don’t want to kill us but keep us down on our knees so we can keep paying them indefinitely,” said Eva Kyriadou, 55, as she stood in a square in downtown Athens where the smell of tear gas and the smashed facades from last week’s violent riots still lingered.
Indeed, the deal was reached amid a growing air of stalemate and concern. Greece’s foreign lenders expressed doubts that the new austerity measures the Greek Parliament passed last week — including a 22 percent cut to the private-sector benchmark minimum wage — would actually be carried out, at least before early national elections as soon as April.
Others are concerned that in the fine print of the 400-plus-page document — which Parliament members had a weekend to read and sign — Greece relinquished fundamental parts of its sovereignty to its foreign lenders, the European Commission, the European Central Bank and the International Monetary Fund.
“This is the first time ever that a European and probably an O.E.C.D. state abdicates its rights of immunity over all its assets to its lenders,” said Louka Katseli, an independent member of Parliament who previously represented the Socialist Party, using the abbreviation for the Organization for Economic Cooperation and Development. She was one of several independents who joined 43 lawmakers from the two largest parties in voting against the loan agreement.
Ms. Katseli, an economist who was labor minister in the government of George Papandreou until she left in a cabinet reshuffle last June, was also upset that Greece’s lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal, and that future bonds issued will be governed by English law and in Luxembourg courts, conditions more favorable to creditors.
While their country’s fate is being decided in abstract, high-level negotiations in Brussels, Berlin and Paris as much as in Athens, many Greeks said they had begun to feel that the debt writedown and new loan is aimed at saving the banks more than the country and its citizens.
On Tuesday, Finance Minister Evangelos Venizelos defended the new debt agreement, calling it “the most significant deal in Greece’s postwar history” and asserting that it had “averted a nightmare scenario.”
Under the terms of the deal, Greece’s private lenders will agree to write down 100 billion euros of Greek public debt and take a loss of more than 70 percent in exchange for longer-term bonds. “I wonder what would be happening today in Greece, in the euro zone and in the global economy if a deal had not been reached, what prospects there would be for banks, for savings, for the wages of Greeks,” Mr. Venizelos said.
But many Greeks were not buying it. “In my simple mind, it seems crazy,” said Dionysius Tsoukalas, 35, as he served customers at a downtown Athens coffee bar. “They took off 100 billion, but now we took a new loan for 130 billion. Why would we do that? It’s crazy.”
Mr. Tsoukalas said he had a master’s degree in industrial product design but worked in the coffee bar five days a week to make ends meet. He said he earned around 700 euros a month, or about $927, and could barely get by, with his mortgage and new tax increases.
He was upset that Greek politicians had not followed through on their plans to make structural changes. “In two years they haven’t done anything,” he said. “They didn’t open the closed professions, they didn’t touch the cartels,” he added, referring to the powerful groups that control the import of consumer goods in Greece’s import-driven economy.
Privately, Greek and European officials said they did not believe that Greece’s increasingly weak political class would have the will or the time to carry out the new austerity measures, which they say require complex legal expertise and cooperation among ministries in a state that lags in administrative capacity.
Parliament already approved the measures in principle and is expected to pass specific implementation bills before the end of the month, even amid growing concern among Parliament members that the measures will push the country further into recession. At the same time, politicians are fighting for what little political capital they have left after two years of austerity has drained them of popular support.
Growing political instability is another wild card affecting Greece’s public finances. Opinion polls say that the center-right New Democracy party is leading in the polls, but that combined, left-wing parties that are opposed to the loan agreement also have significant support.
On Tuesday, Antonis Samaras, leader of New Democracy, who has been pushing for elections and is the front-runner to become the next prime minister, said the new agreement “eliminates the risk of bankruptcy for the country, secures its prospects within Europe, creates the possibility for debt to become sustainable, and opens the road for elections.”
Niki Kitsantonis and Dimitris Bounias contributed reporting.
