The future of Greece in the euro looked more problematic last night as six ministers resigned ahead of a crucial vote on the latest austerity package.
As Greeks, on another 48-hour strike, clashed with police outside the parliament, the technocratic prime minister warned politicians that the future of their country was firmly in their hands.
Lucas Papademos painted a frightening picture for them of the outcome of voting against the €3.3 billion in cuts — 15% of GDP — due to take place during an emergency session either tomorrow or Monday.
If they vote against, as the six ministers who have left the government have said they will, the €113bn loan and the deal with bondholders to halve their debt will not happen.
"We cannot allow the county to go bankrupt," Mr Papademos warned, saying the consequences would be worse than the current austerity, which includes a 20% minimum wage cut and firing 150,000 public servants.
"The state would be unable to pay wages and pensions and cover basic operational costs such as hospitals and schools.
"Imports of basic goods like medicines and fuel would be problematic and businesses would close down en masse. Living standards would collapse and the country would be dragged into a spiral of recession, instability, unemployment and misery... and would lead to Greece’s exit from the eurozone," he said.
He called on his cabinet to show historic responsibility, but warned that anybody not voting for the new measures will be fired from the government.
His finance minister, Evangelos Venizelos ,took the brunt of eurozone finance ministers’ anger against Greece on Thursday night. He was warned that they wanted not just a vote in parliament accepting the new measures, but a commitment in writing from the party leaders.
In a further humiliation, experts from other EU states and the Commission will oversee reforms, which include the tax system, which has only managed to collect 1% of the tax fines handed out in the past two years.
Athens will not be given direct access to the bailout funds, which will be put into an escrow account where paying debtors will take priority over spending on running the country.
Antonis Samaras, leader of the centre-right party, has threatened to vote against. Socialist Mr Venizelos sent his coalition partner a clear message: "If they want Greece to stay in the eurozone, they have to say so clearly. If they don’t, then they have to say that clearly as well."
But relations between Greece and eurozone partners have deteriorated to such an extent that Mr Venizelos was subject to jibes from fellow finance ministers. The Austrian minister asked him directly: "Can we trust you?"
German minister Wolfgang Schäuble said his parliament no longer believed that Greece could be trusted to manage their problems.
Discussions on having the ECB forego profits on the Greek bonds it holds will take place at the eurogroup meeting in Brussels on Wednesday, which may be Greece’s final day of reckoning.
a d v e r t i s e m e n t
This appeared in the printed version of the Irish Examiner Saturday, February 11, 2012
