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What Greece’s Latest Cuts Mean for Workers, EU

February 9, 2012 at 12:00 AM EST
Greek political leaders reached a much-anticipated agreement Thursday on yet another round of austerity cuts. Jeffrey Brown and John Psaropolous of the blog The New Athenian discuss implications for Greeks, the country's economy and its relationship with the continent.
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TRANSCRIPT

JEFFREY BROWN: A short time ago, I spoke to John Psaropoulos in Athens. He’s a freelance reporter and writes the blog The New Athenian.

John Psaropoulos, welcome back to the program.

These talks over cuts had stalled even last night. What was the hardest issue to resolve?

JOHN PSAROPOULOS, The New Athenian: It turns out from the comments made by the party leaders after they emerged from those eight-hour-long talks on Wednesday that the sticking point was one sole issue.

It was whether more money was going to be cut from the pensions budget in 2012, an amount to the tune of $400 million, in addition to roughly that much again that had already been decided to be taken out. The conservative leader, Antonis Samaras, the junior partner in this coalition, but the one who is poised to win election over and above the socialists if an election were to be held in the coming days, is the one who held forth.

And in the comments he made earlier this evening, he said that it was one of the issues that he managed to save from the clutches of the troika of Greece’s creditors, the other issues being salaries — more salaries being cut from the private sector.

JEFFREY BROWN: So, give us a sense of how — who will feel these austerity cuts and to what degree.

JOHN PSAROPOULOS: Well, the austerity is going to be felt by everyone, because 150,000 people now employed in the public sector won’t have a job at the end of four years from now, 15,000 of those people will go this year.

The second thing that’s going to happen in the public sector is that major utilities, the natural gas state monopoly, the state oil refiner, the state gaming monopoly and other utilities like the water sewage companies will all have to be privatized in the first six months of this year. Those are the — some of the jewels in the Greek crown. Those are highly profitable state companies.

And so there will — one will expect more layoffs there, because one of the things that is going into this austerity package is a legal amendment that will allow the state to dismiss people from state companies. That tenure immunity that they have had is going to be broken. They will be able to be dismissed.

In the private sector, the pain of course comes in the form of a dramatic lowering of minimum wage by 22 percent, and for those under 25 by 30 percent, which means that their take-home pay will be a little more than 400 euros, $550 or so. This is going to obviously severely depress the amount of disposable income in the marketplace.

The main argument of the unions against this austerity package is precisely that it is going to reinforce the recessionary spiral that Greece is already in, and if you count the amount by which the Greek economy has shrunk since the beginning of the crisis, it is now 13 points of GDP and rising.

JEFFREY BROWN: Well, now, of course, you do have pushback there from all sides, as we heard the German finance minister raising concerns that this doesn’t go far enough.

Is there a sense among Greek officials that they have done all they can and that this is — this should be enough for the international community?

JOHN PSAROPOULOS: Well, the politicians are already spinning this as an enormously difficult political berth, and they have already begun to massage and to spin the message to their respective constituencies as a necessary evil, particularly the two right-wing contingents of the coalition, the people who were not responsible for putting Greece on the path of European Union-IMF-sponsored bailouts in the first place.

That was done by the socialists who were elected to power in October of 2009. So, the conservatives and the right-wingers have a platform to at least argue that midway, in medias res, if you like, along this policy route, they were forced to agree to a necessary evil, because to opt out of the bailout system would simply have been an even worse, an almost catastrophic option for Greece.

JEFFREY BROWN: So, you do have the protesters in the streets. There’s a strike called for tomorrow.

What can you gauge about — and then, of course, there’s the parliamentary — parliament taking this up with an election on the weekend. What can you gauge about political opinion, through polls or other ways? And do we know whether this is all going to actually happen as they’ve said today?

JOHN PSAROPOULOS: Well, the plan is for this bailout agreement to be submitted to parliament and voted into law on Sunday night.

The debate is scheduled to begin on Saturday morning. However, the biggest unions in the land have organized a 48-hour strike partly coinciding with that debate. And they have organized a protest on Sunday night to coincide with the vote.

Even if these demonstrations fail to dissuade lawmakers, the fact is that the political ground is slipping very, very dramatically away from the present makeup of the Greek parliament — 254 seats out of the 300 are included in the three parties that form the coalition, the socialists, the conservatives and the right-wing LAOS.

If you look at opinion polls now, however, fully 42 percent of voters would go to the communists and left-wing parties, parties left of the socialist PASOK. That is a dramatic shift never before seen in Greek politics. It represents a threat to the incumbent powers and suggests that, if an election is held in the spring, as is widely expected, the result may be the most unpredictable that we have seen in almost four decades.

JEFFREY BROWN: All right, John Psaropoulos in Athens once again, speaking to us from Athens, thanks so much.

JOHN PSAROPOULOS: Thank you.