Thursday, 25 February 2010

History written in the ink of disobedience

GREEK WORKERS took to the streets yesterday as they began to feel the bite of new taxes on fuel, alcohol and tobacco.

They are also worried that the government is about to raise the retirement age and reduce benefits to pull back social security from bankruptcy.

“What will happen to pensions?” asked Fotis, a 60-year-old worker at the Hellenic Telecommunications Organisation, one of roughly 25,000 people who took part in a protest march that brought central Athens to a halt. As an employee of Greece’s telecoms behemoth nearing retirement he should feel secure, but does not: “If the country goes bankrupt who will pay us our pensions? And what will happen to the young?” he asks.

The public sector is especially unhappy. Its one million employees – a quarter of the national workforce – have already taken a roughly five per cent pay cut, and that is expected to double next week. On top of this, the deputy prime minister has intimated that the lifelong tenure that makes public sector jobs so sought after may be up for discussion.

“We are striking because the government is going to cut our salaries,” said Vasiliki Revythi (56), who works at the National Pharmaceutical Organisation – the approval body for medicine in Greece which sets price ceilings.

She is one of the public sector employees who’ve already seen their above-salary benefits reduced, and insists she is not privileged. “I am a biochemist with a PhD; I have 35 years of work behind me. I am a manager, and I get €2,500 [a month]. Salaries are low in Greece. It’s not like Ireland.” Ms Revythi believes the government is leaning on salaried employees as it does not have the means to go after tax evaders.

“Companies should also pay. We know they evade taxes and social security payments. And we should find the people who put Greece in deficit. They must have siphoned money off to Swiss accounts. We should bring that money back.”

These sentiments are expressed more radically by Greece’s communist party, whose cheerleaders were at the head of waves of unionised strikers chanting slogans through megaphones. “No sacrifice for the plutocracy,” said one.

“History is written in the ink of disobedience,” beckoned another.

Organised labour, with left-wing parties, which claim about 12 per cent of the vote in Greece, have often succeeded in stifling social and economic reform.

Yannis Stournaras, the chief economic adviser to the socialist government that put Greece in the euro zone in 2001, doesn’t believe they will pull it off again. “This is a strike which is led by public sector unions. I think it is against the feeling of the average Greek, who sees the spectre of bankruptcy and wants to avoid it. So I don’t think these strikes will continue. I think it’s a one-off and will evaporate.”

Another threat to the government comes from its widening rift with the conservative opposition. The ruling socialists recently decided to call a parliamentary committee of inquiry into the conservatives’ six-year mismanagement of the economy from 2004-2009 as a way of winning support for austerity. But many observers believe this will backfire by killing any hope of consensus at a time of national emergency.

The socialist government is in a race against financial markets to cut the budget deficit by four points this year. If it fails, policymakers fear the markets could fail to refinance €20 billion in debt due this spring. That could have a knock-on effect on the 15 EU countries that also share the euro.

This story was published today in The Irish Times.
You can also hear today's NPR report online.

Greece suffers further credit downgrades 
Financial Times: "The Greek bond markets fell sharply on Thursday after the second ratings agency in as many days warned that the country’s long-term credit ratings could be downgraded.
Greek two-year bond yields, which have an inverse relationship with prices, rose nearly half a percentage point following warnings from Standard & Poor’s on Wednesday and Moody’s Investors Service in the early hours of Thursday morning."

As the FT reports, four Greek banks have also suffered a downgrade due to their exposure to Greek bonds.
"Greek banks came under further pressure on Tuseday after Fitch Ratings downgraded the credit ratings of the country’s four largest banks on expectations that the real economy will worsen further as a result of the tough fiscal measures the government must take.
Ratings on the National Bank of Greece, Alpha Bank, EFG Eurobank Ergasias and Piraeus Bank were lowered by one notch to BBB – just two notches above junk."

Pangalos lashes out at the EU
Deputy Prime Minister Theodoros Pangalos told the BBC he did not think that today's European leaders were up to snuff compared to the leaders of the 1980's. "This is another level of leadership which we don't have today. The quality of leadership today in the union is very, very poor indeed," he said.

He also accused the Germans of destroying the Greek economy during World War Two. 
"They took away the gold that was in the Bank of Greece, they took away Greek money, and they never gave it back. This is an issue that has to be faced sometime in the future," he said.

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