Greece declares ‘Great Depression’
Samaras was speaking before a team of Greece’s international lenders arrive in Athens to push for further cuts needed for the debt-laden country to qualify for further rescue payments and avoid a chaotic default.
Athens wants to soften the terms of a €130bn bailout agreed last March with the EU and IMF to lessen their impact on an economy that is going through its worst post-war recession.
By the end of this year, GDP is expected to have shrunk by about a fifth in five consecutive years of recession since 2008, hammered by tax hikes, spending cuts, and wage reductions required by two EU/IMF bailouts.
Unemployment rose to a record 22.6% in the first quarter.
“You had the Great Depression in the US,” Samaras told Clinton, who was visiting Greece as part of a delegation of Greek-American businessmen.
“This is exactly what we’re going through in Greece — it’s our version of the Great Depression.”
Athens must reduce its budget deficit below 3% of GDP by the end of 2014, from 9.3% of GDP last year — requiring almost another €12bn in cuts and higher taxes on top of the €17bn successive governments have cut from the budget shortfall.
Greece wants its lenders to give it two more years to achieve the budget goal to avoid an even deeper economic slump, but its lenders have opposed the idea because it would imply even more financial aid.
Highlighting growing frustration with Athens, the German magazine Der Spiegel reported in citing high-ranking representatives in Brussels, that the IMF may not take part in further financing for Greece.
The German and Greek finance departments declined to comment on the report, which suggested additional support required for Athens could range from €10bn-€50bn.
Officials have already indicated there would be a shortfall on the current bailout. How much is likely to depend on the extent by how much Greece continues to miss its fiscal targets and the extent of support needed to keep its major banks afloat.
German economy minister Philipp Roesler told ARD public television he did not expect Greece could fulfil its requirements and that that would mean no more money to Athens.
“I am more than sceptical,” Roesler, who is the head of the junior party in Germany’s ruling coalition and often outspoken on euro zone issues, said in an interview.
“If Greece does not fulfil its requirements, there cannot be any more payments to Greece,” added Roesler, whose views often do not reflect those of Angela Merkel, the German chancellor, or Wolfgang Schaeuble, her finance minister.
The inspection team of the troika — the European Commission, IMF, and ECB — will focus on the €11.7bn of spending cuts Athens needs to make during 2013 and 2014.
Clinton criticised Greece’s lenders for focusing excessively on austerity, saying Athens will be more likely to repay its debt if it manages economic recovery first.
“[It] is self-defeating... if every day people are saying this may or may not work to give us back 100 cents on the dollar, so give us more austerity today,” he told Samaras.
“People need something to look forward to when they get up in the morning — young Greeks need something to believe in so they can stake their future out here,” Clinton said.
