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Greece: Second Bailout Deal Hurts Almost Everyone


By Andy Dabilis

When Stavros Karkaletsis looks at the deal Greece signed with international lenders to get a second bailout, he sees his country defenseless — fighter jets parked because there’s not enough fuel.

Thanassi Antoniou, nearing 83, sees himself back at the sewing desk where he worked as tailor for half a century because the government keeps pecking away at his shrinking pension.

From cutbacks for the elderly, to a minimum wage slashed to 22% — 32% for those younger than 25 — Greeks fear a cradle-to-grave decline in their standard of living, although the government said the bargain has saved the country for future generations.

Interim Prime Minister Lucas Papademos pushed the package to ratify a second bailout from the EU-IMF-ECB Troika — this one for 130 billion euros to compliment an ongoing series of 109 billion in loans from a first — through parliament, but with more of the same austerity measures that have pushed Greece into a deep recession.

Unemployment is near 21% — 48% among the young – and more than 111,000 businesses have closed, with predictions it will get worse in the short term.

Parliament also voted to make 3.2 billion euros in cuts to this year’s budget, with the main targets being pensions, wages, health care and pharmaceuticals, and defense spending — which will be pruned by 400m euros.

Those were the conditions attached February 21st by Eurozone finance ministers, who said they are trying to keep the region’s financial bloc safe while propping up Greece too, and help get a write-down in debt of 100 billion euros as part of a so-called Private Sector Involvement (PSI) deal with reluctant investors.

“Things are and will be difficult,” Finance Minister Evangelos Venizelos told the chamber before the vote. “Now we are gaining a safe framework with the decisions of February 21st, with private-sector involvement, recapitalization of banks but it needs work, work, work, unity, consensus, seriousness.”

Karkaletsis, who runs the Athens defense analysis think tank Hellenic Center for European and International Analyses and is the a defense envoy to Cyprus for New Democracy leader Antonis Samaras, told SETimes, “We had to cut from everywhere except defense. You can build a new economy, but if you lose Greek territory, even a small island, you can’t get it back, ” — a nod to Cyprus, still split from a Turkish invasion 38 years ago, and who he feels will take advantage of the crisis to become more expansionist and aggressive.

Antoniou, who lives in a one-room apartment in a building where his daughter lives and helps him, said, “I feel insecurity although I have only myself to care for and there are people with families,” he told SETimes. He kept his old sewing machine, for nostalgic purposes, he said, but added: “Now I wonder what it would be like to be using it again, if I had to.”

Papademos said it was a gut-wrenching decision to make the cuts to keep the money coming, but the alternative was chaos and financial collapse.

Venizelos, who has doubled income and property taxes and taken to taxing the poor, said the agreement opens the door to conclude the PSI agreement and will benefit the country in the long run.

“Any other proposal creates insecurity, uncertainty and can lead to tragic situations,” he said.

Still, said Samaras, “With this new loan agreement, with this drastic cutting of the debt, we have averted the country’s expulsion from the euro … we have saved social cohesion, at least for now.”

Those arguments haven’t worked with workers, those in the public sector who’ve seen their pay cut 30%. Some private sector salaries have been cut up to 50% to keep pace with the fall in the minimum wage, and some workers could find themselves with take-home pay of less than 400 euros a month.

Pressure has already reached a boiling point. A distraught unemployed worker stormed into a plastics factory in Komotini on Friday, shooting and wounding three people and taking several others hostage for hours before surrendering to police.

Pantelis Magalios, head of a labor centre in Komotini, told reporters that the gunman had run out of money. “We condemn this incident, which should not have happened. But the problem is that have to think about what put the gun in this man’s hand. What made him reach this point: unemployment, which is on the rise, and a cut in wages. These are problems we will continue to be confronted with.”

Aggelos Tsakanikas, an engineer who is Head of Research for the Athens-based Foundation for Economic and Industrial Research, said Greece is under a double-edged sword — a sense of relief undercut by constant fear.

“It’s a very harsh programme that will deepen the recession. Instead of -3% of GDP, we estimate -4.5% because these measures affect the real income and wages,” he told SETimes.

But, he added, “This was the deal to get the second loan, and especially the PSI, which will have a positive effect on debt.”

Papademos said he believes the economy could rebound in 18 months, but only if new growth ideas work.

Pantelis Kammas, lecturer in economics at the University of Ioannina, said Greece has a long road to recovery. “The problem with fiscal austerity is the recession, reduced tax revenues,” he told SETimes, and consumer spending has dropped, leading to a 33m euros decline in revenues in January this year over 2011 figures.

“The only way to break this vicious cycle is promote reforms that have growth,” he said, including ending the monopoly many Greek professions hold — pharmacists, engineers, architects and lawyers — which the government has been reluctant to do.

Alex Afouxenidis, a British-schooled Researcher at the Institute for Political Sociology, National Centre for Social Research in Athens, said the measures will fail and are taking a heavy human toll, especially on the young who see no future beyond reduced minimum wages and few prospects.

“It’s a wasteland, the recovery will take years,” he told SETimes. “It’s a complete decomposition of whatever social welfare we have. The whole country has been de-skilled … if you don’t have resistance to this, you don’t have hope.”


The Southeast European Times Web site is a central source of news and information about Southeastern Europe in ten languages: Albanian, Bosnian, Bulgarian, Croatian, English, Greek, Macedonian, Romanian, Serbian and Turkish. The Southeast European Times is sponsored by the US European Command, the joint military command responsible for US operations in 52 countries. EUCOM is committed to promoting stability, co-operation and prosperity in the region.

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