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For Greece, It's Austerity -- or Else

"Bankruptcy for Greece would be hell."

Common Dreams staff

French President Nicolas Sarkozy welcomes German Chancellor Angela Merkel upon her arrival for a joint Franco-German cabinet session at the Elysee Palace in Paris on Monday February 6. (AFP Photo/Lionel Bonaventure)

French President Nicolas Sarkozy and German Chancellor Angela Merkel continue their push for Greece to accept further austerity measures in order to receive bailout funds and warned that Greece was "running out of time" to accept the deal presented to them. Today Merkel told Greece that it needed to make up its mind on taking the reform package while Greek unions announced a nationwide strike for tomorrow in protest of the austerity measures.

Agence France-Presse reports:

A sharp warning by French President Nicolas Sarkozy and German Chancellor Angela Merkel that it was time for Greece to fulfil its undertakings and would not get any fresh aid unless it did highlighted a more uncompromising tone.

And Reuters adds:

German Chancellor Angela Merkel told Greece on Monday to make up its mind fast on accepting the painful terms for a new EU/IMF bailout, but the country's political leaders responded by delaying their decision for yet another day.

Failure to strike a deal to secure the 130 billion euro ($170 billion) rescue - much of which Germany will fund - risks pushing Athens into a chaotic debt default which could threaten its future in the euro zone.

Speaking in Paris, Merkel expressed the exasperation spreading among euro zone leaders at seemingly endless wrangling in Athens that has yet to produce a definitive acceptance of the austerity and reform conditions demanded by the lenders.

"I honestly can't understand how additional days will help. Time is of the essence. A lot is at stake for the entire euro zone," she told a news conference with President Nicolas Sarkozy.

But leaders of the three parties in the coalition government appeared to need at least one additional day.

The Guardian blog following the Eurocrisis looks at the repurcusions of Greece not accepting the bailout terms and therefore going bankrupt:

What would actually happen to the country if Greece does go bust?

That's what the country's technocrat prime minister Lucas Papademos is finding out, as the various meetings about its debt and austerity measures drag on. Papademos has asked experts at Athens' finance ministry to compile a detailed analysis of what bankruptcy would entail. Our correspondent Helena Smith says:

The verdict, according to Greek officials, is that it will make Argentina "look like a picnic in comparision." What we are experiencing now with all the austerity is actually a form of paradise. Bankruptcy for Greece would be hell."

Papademos, a macro-economist, intends to present the report at the meeting (we all hope) he will finally hold tomorrow with the three party chiefs backing his coalition.


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Presumably to push them into finally backing the proposals.

In an interview with Germany's Der Spiegel, Luxembourg Prime Minister and head of the Euro Group Jean-Claude Juncker also pushed the need for Greece to accept the economic reforms, including privatizations, or head towards bankruptcy.

Der Spiegel: But they're still not doing enough. The Greeks were supposed to raise €50 billion by privatizing state assets. But now Athens has acknowledged that this figure was just plucked out of the air. How do you explain that to EU citizens?

Jean-Claude Juncker: I'm currently engaged in explaining to the EU's citizens the improvements that have been made in Greece. However, when it comes to the issue of privatization, I prefer to address the government in Athens because in this respect it is falling considerably short of what was agreed. Greece has to realize that we're not going to let up on the privatization issue.

SkyNews reports that Greece's two major unions have called for a 24-hour strike on Tuesday in response to the austerity push:

"If these measures are adopted and the government does in fact cave into pressure," warned Thanos Vassilopoulous of Greece’s biggest labour union, GSEE, "then workers will be faced with an armageddon."

"We must resist. We must revolt."

GSEE and Adedy, the civil servants union, have called for a 24-hour nationwide strike on Tuesday, warning of heightened strike action in response to added austerity.

The BBC notes this on weekend developments:

Talks on Sunday between Greek PM Lucas Papademos and the leaders of his three-party coalition over new austerity measures ended without full agreement.

The measures include:

  • Further government spending cuts equal to 1.5% of GDP
  • Re-capitalisation of Greek banks - whilst retaining their independence
  • Reducing labour costs, including a cut in the minimum wage and holiday bonuses
  • Further civil service job cuts
  • Cuts to the size of pension programmes

On Sunday, the prime minister's office said that some agreement had been reached in some areas. But there were disagreements over the size of job cuts, cuts to the minimum wage, pension cuts and the ending of a so-called 13th or 14th month's pay as a holiday bonus.

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