Another general strike in protest against the EU/IMF austerity in Greece have brought the country to a standstill once again. Today’s general strike the 1oth since the crisis started. Greek youths clashed with the police again Wednesday, with protesters hurling rocks in the face of tear gas and stun grenades.
Port workers, teachers, civil servants, professors and nurses stayed off the job in some 14 cities across the nation, with schools closed, public transport halted, hospitals providing only emergency services and flights in and out of Athens airport grounded for four hours.
This is the second general strike this year, and the 10th since the start of the crisis.
Prime Minister George Papandreou is under pressure to hold his government together, with growing numbers of MEPs and ministers coming out publicly against austerity measures and privatisation, siding with the protesters.
The cabinet is to consider tough revisions to the country’s fiscal plan to 2015 next week, hoping to convince the European Commission, European Central Bank and International Monetary Fund troika of their commitment to reducing the country’s €326 billion debt pile.
But yesterday the Greek finance ministry said that the central government’s deficit had increased 14 percent on last year for the first quarter.
Meanwhile, the Greek daily newspaper, Kathimerini, reports that the IMF is currently putting together a €80-100 billion rescue for the country, employing unacknowledged sources.
The rumours come after the government denied that it was engaged in any such negotiations.
However, European citizens are getting used to denials by ministers over such matters that days later are confirmed.
EU’s finance ministers meeting next Monday will consider what strategy to take. But no decisions are expected until the troika inspectors return with their verdict on the situation.
Leaders are divided as to what approach to take to confront the dawning reality of a pro-cyclical austerity policy that offers ever-widening public debt and little likelihood of a return to growth, with Greece returning to the markets for funding in 2012 a virtual impossibility.
Also on Wednesday, the European Commission reiterated its stance that “restructuring is excluded” as an option, a position underlined by French finance minister Christine Lagarde the same day speaking in centre-right newspaper Le Figaro.
“Nobody wants to keep funding countries in difficulty like this,” she continued.
Ms. Lagarde stresses that an acceptance of restructuring would result in a hike in interest rates for all euro zone government borrowing and the ECB would be saddled with considerable losses.
However, it’s being reported that the German finance ministry are considering restructuring as a final solution, despite the losses to banks, accepting that the current policies are not working, that endless funding of the Greek state is not politically viable and that a controlled restructuring could limit the losses.
Austria’s ECB board member, Ewald Nowotny, for his part, says he opposed restructuring, because it would “only heighten the crisis” and produce “massive consequences” for all of Europe’s banking system, not just that of Greece.
But at the moment it seems that the policy makers seems to go for an indefinitely extending aid to Greece – and potentially Ireland and Portugal – and thereby accepting the costs of restructuring.
The politicians seem to be focused on that a Greek exit from the euro must be avoided at all costs.
“Everything would be better than an exit,” Mr. Nowotny says.
Such an outcome would lead to massive losses for German banks in the face of the certain collapse of the Greek banking system that would result from such an exit.
Moreover, the ECB itself would be facing up to €110 billion owed by Greek financial institutions, requiring a recapitalisation of the central bank, according to the politicians.
Nevertheless, beyond the Spiegel report, three days ago, Hans-Werner Sinn, head of the influential Munich-based IFO Institute for Economic Research, recommended the country leave the single currency.
A recent poll for Mega Television reported that 60,3 percent of the Greek citizens want to renegotiate the EU-IMF bailout and more than 25% want the country to exit both the bailout programmes, as well as the euro zone.
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