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Greek report Greek report
by Euro Reporter
2011-10-28 07:41:21
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Greece vows to build on EU deal, people sceptical

Greece vowed to press ahead with economic reforms on Thursday to capitalise on an EU deal to slash the country's debt, despite anger among its citizens at the prospect of years of painful belt-tightening demanded by foreign lenders. In a bid to calm fears among Greece's 11 million people, Finance Minister Evangelos Venizelos promised there would not be further cuts to wages and pensions as a result of the agreement sealed in Brussels to halve the 200 billion Euros of Greek debt in the hands of private bondholders.

"We need to push ahead with all structural reforms," Venizelos told a news conference, appealing for unity. "We must not lose this chance. It's too big." The minister said that negotiations now needed to take place with banks to determine their participation in the bond swap to slash Greece's debt mountain, forecast to top 160 percent of gross domestic product (GDP) this year. The head of Greece's public debt agency, Petros Christodoulou, said the talks would last two to three weeks. One possibility, he said, was for bondholders to receive 30 percent of their remaining investment in cash, and the remainder in bonds.

Prime Minister George Papandreou, briefing President Karolos Papoulias on the deal, said it should help ease the burden on Greece's middle class and turn the page for the country, racked by its worst recession in four decades. But on the streets of Athens, Greeks tired of record unemployment and falling wages poured scorn on the EU bailout, saying that it heralded a long period of more austerity. "What rescue? Europe has betrayed us. Can't they see we've nothing left to give?" said 85-year old George Kapsokalyvas, a public sector pensioner. "Only God can save us."


Stocks up but opposition blasts debt deal

Shares on Greece's stock market closed sharply up Thursday following a debt deal reached by European leaders that the country's finance minister described as a new starting point for the country. But opposition parties blasted the landmark agreement, with conservatives warning it condemned the country to "nine more years of collapse and poverty." Shares on the Athens Stock Exchange joined a surge in world markets, closing up 4.82 percent at 811.11, with banking stocks up nearly 12 percent during the day after suffering heavy losses earlier this week.

Greece's sky-high rates for long-term borrowing and default insurance also eased slightly. The deal requires banks to take on 50 percent losses on Greeks bonds. Eurozone countries and the International Monetary Fund will also provide an additional €100 billion ($140 billion) in rescue loans as a second bailout package for Greece. "We have avoided a mortal national danger," Socialist Prime Minister George Papandreou told a news conference in Brussels after the night-long negotiations. "Today we have the ability to close our accounts with the past," he said. "A burden from the past has gone, so that we can start a new era of development, on our own steam."

Greece's troubled €230 billion ($320 billion) economy is heading into a fourth year of recession, with unemployment at 16.5 percent and taxpayers struggling to cope with a barrage of new taxes on property, purchases and their shrinking incomes. Finance Minister Evangelos Venizelos said Greeks would not face any new cutbacks affecting their salaries and pensions this year or next — provided the austerity measures voted on so far are fully implemented. "I want to say in an absolutely categorical way, that Greece has taken and approved the measures it had to for 2011 and 2012," he said in a news conference after returning from Brussels. Venizelos said the new deal was more favourable for Greece and harsher on banks than a previous deal reached in July under which banks would have taken a 21 percent loss on their bonds. But the minister said the new private sector participation, which is voluntary, would still be attractive. "I believe that everyone in the private sector understands ... that the formula is in the interests of all and is attractive to all," he said.


Scepticism in Greece after latest EU deal

The latest European deal has been greeted with deep scepticism by many in debt-choked Greece. Fearing more painful belt-tightening, they doubt this is a quick fix to a crisis that has mired their country in its worst recession for four decades.

“It is a dark and shady deal,” said retired colonel Tasos Skarlatos, 54, in Athens. “Everything here gets worse by the day. God help us.” “As long as these 300 politicians are in parliament, things won’t improve,” said Athens resident Spiros Karalis, 57. “They are the ones that got us into this situation, so it is unlikely they will save us.”

Fellow Athens-dweller Eleni Mantika went even further, saying the premier and his finance minister should be hanged, for selling off the country “down to the last island.” In Greece’s parliament, the opposition has been scathing. The leader of the main conservative party, New Democracy, said control over policy is being passed to the EU and the IMF.

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