Greek compromise: Between a rescue plan and a hard place

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Published time: September 11, 2012 14:09
Edited time: September 11, 2012 19:38

Tensions are high in Greece with the country’s PM facing a challenging task of satisfying bailout creditors demanding a new set of controversial austerity cuts, and keeping the peace with the Greek people who adamantly reject some of the cutbacks.

­Antonis Samaras is meeting with officials from the so-called troika of the European Union, International Monetary Fund and European Central Bank, who expect to stay in Athens for several weeks before determining whether Greece has done enough to qualify for the 31 billion euro ($40 billion) in loans needed to stay afloat.

According to Greek officials, the Troika is pressing for the unpopular wage and pensions cuts as well as for 150,000 job losses in the public sector before 2015.

“It’s a tough discussion, because the measures are tough,” Finance Minister Yannis Stournaras told journalists after attending Monday’s talks. Asked whether Greece’s creditors are insisting on job cuts in the country’s bloated, inefficient civil service, Stournaras only commented that: “We are trying to convince them that our arguments are correct.”

However Troika officials rejected part of the Greek proposals in talks with Stournaras on Sunday.

Samaras is now puzzling over a tricky task – how to satisfy Greece’s creditors in order to ensure the next batch of rescue loans the country desperately needs to avoid bankruptcy, and at the same time to compromise with his center-left coalition partners and ordinary Greeks who reject some of the cutbacks saying it will cause further pain and unrest in the country. He is also under pressure from the radical left opposition who back Greece leaving the euro, and could use their chance to seize power and reject the bailout, if the government formed in June collapses.

Rescue loans from Greece’s European partners and the IMF since May 2010 allowed the country to avoid bankruptcy, but to meet creditor’s conditions and have the money keep flowing, the government has repeatedly hiked taxes, cut pensions and salaries, and raised the retirement age – the measures have provoked public anger and led to a series of violent strikes and protests.

Labor unions strongly oppose the new measures. In some cases the new cuts will take more than a quarter off people’s salary, which has already been slashed by 25% over the past two years. On Monday university professors launched a two-day strike in the midst of the autumn exam period. Staff at technical universities will walk off the job all week, with state nursery and primary school teachers planning to be on strike on Wednesday, AP reports.

More than 30,000 Greeks have marched in the northern Greek city of Thessaloniki in protest of the new measures. The strike was the biggest since the coalition government came to office in June.