Brussels, 13/02/2012 (Agence Europe) - The Greek government's vote in favour of the draconian austerity measures to be met by Greece if it is to receive the second bailout, was welcomed by Europe on Monday 13 February after a weekend of violence and riots across the country. Athens must meet these conditions if the Eurogroup on Wednesday 15 February is to give political support to the payment of at least €130 billion over three years. The bailout should allow a partial restructuring of Greece's debt, to reduce it to €100 billion by 2020, and it has to begin on Friday if Greece is to avoid default at the end of March.
Olli Rehn said the vote on Sunday expressed the determination in Greece to end the spiral of unaffordable public finance and the loss of competitiveness. Pointing out that the second bailout would be backed by unprecedented financial aid from Europe, he urged Greek political parties to take ownership of and properly implement the austerity measures, adding that it would take time and effort from the Greeks to ensure that second programme generated tangible results. A spokesperson for the German chancellor, Angela Merkel, weclomed the Greek parliament's vote as a demonstration of the desire by Greece to introduce difficult reforms.
The Greek parliament voted in favour of the second bailout programme by a comfortable majority despite opposition from one of the parties in the coalition government - nationalist party LAOS (see EUROPE 10551). Some 199 MPs voted in favour, 74 against and 27 abstained. The socialist party PASOK and the conservative party New Democracy expelled a total of 43 MPs who refused to approve of the measures. The second austerity programme includes a 22% cut in the minimum wage in the private sector; - €600 million of cuts in supplementary private pensions; - 15,000 job cuts in the civil service in 2012, and a further 150,000 by 2015; the privatisation of public companies like the OPAP lottery, HELPE oil company, ports and airports.
The Eurogroup has set three prior criteria for the release of the bailout of at least €130 billion and a partial write-down of the Greek debt, to reduce it from 160% to 120% of GDP (a cut of €100 bn). Alongside approval of by the Greek parliament of the deal, Lucas Papademos' government must endorse other cuts of €325 million and pledge in writing to apply the second bailout programme no matter who wins the general election in April.
During the vote on Sunday, the leader of the conservative party New Democracy, Antonis Samaras, urged his party: “I ask you to vote in favour of the new loan agreement today and to have the ability to negotiate and change the current policy, which has been forced on us.” The polls suggest that Samaras will be the next prime minister after the general elections in April. His comments do not necessarily imply that a future Samaras government would criticise the deal. In lreland, another member state in receipt of international aid, Enda Kenny managed to get some of the austerity measures changed in the Irish austerity programme without jeopardising the budget and macroeconomic targets.
Olli Rehn said that the vote by the Greek parliament was a key stage towards the finalisation of the second bailout. He said he was confident that the two other criteria would be met by the next Eurogroup meeting on Wednesday `15 February. The commissioner said that there would be disastrous consequences if Greece went bust, particularly for the weakest sections of the population, which would cause a chain reaction throughout the European economy. It is clear that the economic model that Greece applied until 2009 could not continue because it led to the emergence of imbalances, he added. He criticised the violence that had destroyed many buildings in Greece, mainly in Athens.
On Wednesday, the European Commission will unveil to finance ministers its ideas on increasing scrutiny of how Greece is implementing its austerity programme. This is not a matter of taking control, but rather making the payment of aid conditional upon Greece implementing its austerity measures, explained the chair of the Eurogroup, Jean-Claude Juncker, late last week. Rehn recognised at the end of last week that the creation of a special fund to guarantee repayment of the Greek loans was under discussion. Finance ministers will have the latest analysis of the affordability of the Greek debt by the troika of lenders (Commission, ECB and IMF). (MB/transl.fl)