Greek Crisis Unrelenting

• June 18th, 2011
• Posted by EUEditor

Preparations for this Sunday’s (19.6.11) emergency EU Finance Ministers’ meeting on Greece have seen some obstacles to agreement removed, but in the streets of Athens, it remains bad news.

Police fired rounds of tear gas at protestors on the weekend, objecting to increased austerity measures, set as a condition for the next round of loan support from the European Union and International Monetary Fund.

Resignations from the government of the socialist party leader, George Papandreou, and a cabinet reshuffle described as restoring “stability”, have inflamed opposition from employee groups especially.

Objections to government job lay-offs are intense where the official unemployment rate in the country has already reached 16%.

Caught in recession following the global financial crisis, overspent and with steeply neglected revenue raising, the Greek government has contracted to continue its budgetary squeeze, in return for access to funds at viable rates.

Private agencies have pronounced a lowest-ever credit rating for Greece, demonstrating the severely limited range of options.

An appraisal in this commentary from the Bloomberg agency:-

“Greece’s immediate concern is to obtain 8.7 billion euros from Europe and 3.3 billion euros from the International Monetary Fund in July, promised as part of last year’s aid package to stave off the euro area’s first default.

“European estimates put Greece’s 2012-14 financing gap at as much as 170 billion euros. It would be filled by about 45 billion euros of loans, plus around 57 billion euros in unspent aid from the 2010 bailout, roughly 30 billion euros in asset- sale proceeds and about 30 billion euros from creditors.

“A year after the bailout that aimed to stop the spread of the debt crisis, Greece remains mired in a third year of recession, shut out of financial markets and saddled with the biggest debt load in the euro’s history.”

In Berlin on Friday (17.6.11), Chancellor Angela Merkel stepped back from a demand for continuing strong private sector participation in the Greek bailout.

That would have been achieved by extending the maturity date of bonds currently held.

The Chancellor indicated she would relent on that issue, after talks with the visiting French President, Nicolas Sarkozy, who has been publicly insisting on a concerted effort to maintain the deal on Greece’s economic solvency.

The European Union Finance Ministers, meeting at Luxembourg this weekend, are expected to prepare the terms for a decision on continuing with the Greek rescue plan, for implementation after a regular meeting of the group on 11.6.11.

Reference

Al Jazeera, Doha, “Grassroots politics flourish in Greek turmoil”, 17.6.11. http://english.aljazeera.net/indepth/opinion/2011/06/2011617112541750476.html, (18.6.11).

Rainer Buergin and Francine Lacqua, “EU Ministers Set to Clear Way for Pending Greek Aid Payment, Germany Says”, Bloomberg, NY, 17.6.11. http://www.bloomberg.com/news/2011-06-17/eu-finance-chiefs-are-set-to-clear-way-for-greek-aid-payment-germany-says.html, (18.6.11).

Le Monde, Paris, “Merkel recule face à Sarkozy et la BCE sur la dette grecque”, (Merkel backs off in face of Sarkozy and the ECB on Greek debt), 17.6.11. www.lemonde.fr, (18.6.11).

Reuters, London, (video), “ Greek reshuffle as debt woes loom Reuters Video”, 17.6.11. http://www.youtube.com/watch?v=OhlmfX6ulVY&feature=player_embedded, (18.6.11).

Mark Weisbrot , “Greece: bond slave to Europe”, The Guardian, Manchester, 17.6.11. http://www.guardian.co.uk/commentisfree/cifamerica/2011/jun/17/greece-bailout-austerity, (18.6.11).

Pictures greekleftreview, rfi, topnews

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