Greek officials met with European Commission (EC)
President José Manuel Barroso and international financial officials
yesterday to discuss a new round of budget cuts worth 11.5 billion euros
(US$14.4 billion) in 2013-2014.
These cuts, amounting to over 5 percent of
Greece’s Gross Domestic Product (GDP), will devastate a Greek economy
already bled white by repeated waves of social cuts over the last three
years. The Labor Ministry budget is to contract by €5 billion, largely
at the expense of pensions.
Greece’s devastated public hospital system faces
another €300 million in cuts. Health minister Andreas Lykourentzos was
forced to deny reports that Athens plans to impose a mandatory €1,500
upper limit on health spending per patient in Greece.
Relative to the size of Greece’s economy, these cuts
are massive; corresponding amounts would be
$802 billion in the United
States, £82 billion in Britain, or €136 billion in Germany. They come on
top of the deepest economic contraction in Greece since the Nazi
occupation of that country; most workers have lost 30 to 50 percent of
their wages and benefits. Reports earlier this year suggested that
roughly 30 percent of Greece’s population is forced to rely on street
clinics for health care.
Athens is making the latest budget cuts in a
desperate attempt to meet European Union (EU) debt-cutting targets,
which it has missed as austerity policies shrank Greece’s economy faster
than it could pay down its debts. The economy is projected to contract
by 7 percent in 2012, more than earlier forecasts of 4.5 percent. Greece
needs further assistance to meet a €3.26 billion debt payment due on
August 20.
The leaders of the Greek government coalition met
last night to finalize the budget cuts. Prime Minister Antonis Samaras
of New Democracy (ND), PASOK leader Evangelos Venizelos, and Democratic
Left (DIMAR) leader Fotis Kouvelis approved roughly €10 billion of the
cuts. Government spokesman Simos Kedikoglou said the meeting had been
“constructive,” adding: “Everyone wants to contribute to achieving
fiscal targets.”
Samaras, Venizelos, and Kouvelis reportedly disagreed
on where to make the last €1.5 billion in cuts. Samaras was reportedly
opposed to cuts in “special salaries” in the public sector, mostly paid
to the security services, while Venizelos hoped to avoid further cuts to
pensions. Coalition talks to finalize the cuts are slated to resume
Monday.
Samaras will also meet officials of the “troika”—the
EC, International Monetary Fund, and European Central Bank (ECB)—for
further talks today.
After a two-hour meeting with Samaras, Barroso
reiterated EU demands for cuts: “To maintain the trust of European and
international partners, delays must end. Words are not enough, actions
are much more important than words.”
These events underscore the bankruptcy of the Greek
political establishment—both the current government, which imposes
whatever cuts the EU demands, and the pseudo-left SYRIZA party that
emerged as ND’s main opponent in the June elections. While weakly
criticizing EU austerity, it pledged to repay the banks and made public
campaign gestures to the army and police, effectively handing the
election to ND. It has pledged to be a “responsible” opposition, not to
call strikes, and to support the EU (See, “SYRIZA backs Greek government’s capitulation to the EU”).
Social and political tensions are escalating in
Greece, reflected in the recent resignation of General Constantinos
Ziazias as army chief of staff. He announced Wednesday morning that he
was resigning his position, explaining: “I was called at 2 a.m. to
receive a list with names of officers for promotion and discharge. I
cannot accept such interference with my duties.”
This was apparently a continuation of infighting
inside the army that flared up last autumn, when the PASOK government of
Prime Minister Giorgios Papandreou sacked the entire top brass amid
rumors of a possible coup, after the announcement of further unpopular
austerity measures. This provoked opposition among former army personnel
in ND’s “Defense Group,” including current Deputy Defense Minister
Panayiotis Karabelas. These forces are now pressing for a redistribution
of influence inside the army, amid rising discontent in the ranks over
economic policy.
Greek news site onalert.gr commented, “Without a
doubt, the personnel of the army is in a desperate state … due to the
cuts they have suffered and those that are coming, and on top of that
the anxiety of being posted elsewhere. In no other civilized European
country are the promotions and discharge of army officers connected in
such a blatant and crude way with political parties.”
EU officials are pressing ahead to preserve the euro
at the expense of massive attacks on the working class and the Greek
economy. At the same time, a bitter debate is raging inside the European
bourgeoisie over whether to rescue Greece and other debt-stricken
countries. Some favor cutting off credit to Greece, forcing it to leave
the euro zone and to reintroduce and print its own national currency to
stave off a collapse of its banking system.
Markus Soeder, the finance minister in the German
state of Bavaria, was the latest to call for expelling Greece from the
euro zone. Yesterday he called Greece a “money sink,” adding: “In terms
of reform steps there is nothing. So I don’t think the solution lies in
giving more money to Greece, but that Greece will leave the euro zone.”
Yesterday, however, troika officials also told the Greek daily Kathimerini
that if Greece made the currently agreed-upon cuts, they would support
keeping Greece in the euro zone. For his part, Barroso said that all
European heads of state were committed to keeping Greece inside the euro
zone, “as long as its commitments are honored.”
Yesterday ECB head Mario Draghi also pledged the ECB
would do “whatever it takes to preserve the euro,” adding: “Believe me,
it will be enough.” Financial commentators widely interpreted this as a
pledge to print whatever money was necessary to finance indebted euro
zone states—including not only Greece, but larger economies including
Italy and Spain.
As it seeks to free up resources to pay off the
banks, the European bourgeoisie is thus choosing between two equally
bankrupt policies: ruining workers in the indebted countries with
devastating austerity, or printing large amounts of money—a policy
Berlin opposes, citing a ban on ECB “debt monetization,” or financing
government spending by inflationary money-printing.
Referring to the ECB’s €1 trillion loan to European banks earlier this year, the Wall Street Journal
wrote, “For a while the banks did what the ECB wanted them to: they
bought their domestic sovereign debt, driving down yields. But €1
trillion proved not to be enough. Yields fell only temporarily. Now it
seems Mr. Draghi is willing to ignore restrictions on debt monetization …
In theory the ECB is only limited by how fast it can run its printing
presses. And in the days of electronic finance, that’s essentially the
speed of light.”
Remarkably, the massive amounts of credit made
available to the banks have not produced economic growth. While European
stock markets ended up on expectations of fresh funds from the ECB, the
latest economic figures for in Europe and internationally released show
continued contraction in Europe. The British economy shrank a
larger-than-expected 0.7 percent in the second quarter of the year, and
Germany faces falling business confidence amid expectations that it will
need to help fund a bailout of the ailing Spanish banking sector.
No comments:
Post a Comment