Greece: Strikes continue as EU demands more severe austerity measures

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Greece: Strikes continue as EU demands more severe austerity measures
By Julie Hyland
19 February 2010

A series of strikes are underway in Greece in advance of a planned
general strike involving both the public and private sectors on
February 24.

Beginning on Tuesday, workers in the finance ministry and customs
officials began several days of strike action in protest against the
social democratic PASOK government’s imposition of austerity measures.

Hundreds of finance ministry and customs workers held a protest rally
outside the parliament building in Athens on Wednesday, carrying
banners reading, “Enough! The Crisis Wasn’t Caused by Civil Servants.
The Bill Should Be Paid by the Wealthy.”

The strike has affected government operations such as the national
statistics office and the market watchdog, the Hellenic Capital
Markets Committee, and caused widespread disruptions in trade,
impacting both imports and exports. On Thursday, custom workers
announced they would extend their action with additional 48-hour
rolling strikes that will close customs offices until Wednesday’s
general strike.

Lorry drivers involved in petrol haulage were due to stage a 24-hour
strike today, which was expected to cause long queues at fuel
stations. Other public service truck drivers have threatened to join
the strike. Taxi drivers are also expected to stage a second 24-hour
strike.

Last week’s 24-hour protest by civil servants closed down schools and
impacted hospitals and airports.

The Greek trade unions have called partial strikes and one-day actions
in an effort to contain and defuse popular opposition. Behind the
scenes, they are working with the PASOK government to buy time to
implement unprecedented austerity measures. However, there are growing
fears in Greek and European ruling circles that working class
resistance could escape the control of the union bureaucracies and
their allied “left” parties.

The PASOK party, which came to power in October on the back of
widespread discontent with the conservative government of Kostas
Karamanlis, has set out sweeping public spending cuts in order to
assure the international financial markets that it will slash the
country’s deficit from an estimated 12.7 percent of gross domestic
product (GDP) to 3 percent by 2012.

Prime Minister George Papandreou had said that his government would
“draw blood” if necessary. Measures currently being implemented
include a wage freeze across the public sector, a 20 percent
across-the-board cut in civil-service bonuses, a two-year increase in
the average retirement age and higher taxes.

According to the Wall Street Journal, the combined impact of the
measures for many of Greece’s civil servants amount to a “wages cut by
as much as 25 percent in real terms.” But even this is not regarded as
sufficiently harsh by the major international financial institutions.

Earlier this week, European Union finance ministers rejected PASOK’s
measures as inadequate and served notice that if Athens fails to
comply with stricter austerity measures, the non-elected
representatives of the European Commission and the European Central
Bank will effectively take control of the country’s fiscal policies
and impose their own terms under Article 126.9 of the EU’s Lisbon Treaty.

In their statement, the finance ministers “issued a recommendation to
Greece to bring its economic policies into line with the Union’s broad
economic policy guidelines and remove the risk of jeopardising the
proper functioning of economic and monetary union, and adopted a
decision to make this recommendation public.”

The statement insisted that Athens “ensure a budgetary adjustment of
at least 4 percent of GDP in 2010 and bring its deficit back under 3
percent in 2012 at the latest.” This involves what the finance
ministers described as a “bold and comprehensive structural reform
package” that must cover “wages, pension reform, health care reforms,
public administration, the product market, the business environment,
productivity and employment growth.”

Athens has until March 16 to report back to the EU on its progress,
with a further review set for May 15 and then every three months
thereafter. European Monetary Affairs Commissioner Olli Rehn said that
experts from the European Commission, the European Central Bank and
the International Monetary Fund “will be on the ground in Athens in
the coming days” to check on the government’s progress.

Germany’s deputy finance minister, Joerg Asmussen, said afterwards
that the ministers had “made it clear the ball is in Greece’s court.”
He continued, “Additional measures by Greece are needed,” adding that
Athens should follow the example of Ireland and Latvia, which are
implementing savage cuts in public spending and wages.

Kurt Lauk, head of the business caucus of German Chancellor Angela
Merkel’s Christian Democratic Union, threatened that, “If a country is
in receivership, I think we need to introduce a rule that they are not
allowed to vote while they’re in receivership—in the council or on any
other issue.”

Britain’s Telegraph newspaper pointed out, “While the symbolic move to
suspend Greece of its voting rights at one meeting makes no practical
difference, it marks a constitutional watershed and represents a
crushing loss of sovereignty,” amounting to “economic suzerainty.”

According to the Wall Street Journal, “German and French banks carry a
combined $119 billion in exposure to Greek borrowers alone and more
than $900 billion to Greece and other countries on the Eurozone’s
vulnerable periphery: Portugal, Ireland and Spain.”

The Journal continued, “Together, France and Germany’s banking sectors
account for roughly half of all European banks’ exposure to those
countries…. If Athens were to default, investors may question whether
French and German banks could withstand the potential losses, sparking
a panic that could reverberate throughout the financial system.”

The insistence of the German and European bourgeoisie that there will
no automatic bailout for Greece is motivated largely by political
considerations. Using Athens as a test case, they are making it clear
to the working class across the continent that there will be no letup
in the imposition of draconian attacks on jobs, wages and living
conditions that are being prepared in every country.

The latest row over claims that Athens was involved in a series of
complex financial deals with the US investment bank Goldman Sachs
aimed at masking the size of its fiscal deficit has the same
objective. The allegations are being used to demand the Greek
population—amongst the poorest in the EU, with an unemployment rate of
almost 30 percent amongst under 24 year olds—accept penury as
recompense for their supposedly “spendthrift” ways.

In another provocative statement, Horst Seehofer, head of Germany’s
Christian Social Union, a member of the Merkel coalition government,
said that Athens must not receive “a single euro” of German taxpayers’
money.

“Naturally, the behaviour of Greece—living beyond its means for years
and reporting inaccurate numbers to Brussels—cannot be rewarded in the
end,” he said.

Athens has been given until the weekend to explain reports that it was
involved in an arrangement with Goldman Sachs to use some $10 billion
worth of cross-currency swaps to help massage the country’s debt. It
is alleged that under the swap deal Greece effectively received a £640
million loan which, because it was treated as a currency trade, was
not declared on its books.

It is claimed that this loan enabled Greece to meet the eurozone’s
requirements on government borrowing, which set a budget deficit limit
of 3 percent of GDP. The country had failed to meet the criteria for
joining the euro bloc in 1999, but succeeded in 2001. Goldman Sachs
reportedly benefited to the tune of £192 million by arranging the
transaction.

Athens insists that the swaps did not flout EU rules and were, in
fact, legal at the time. Christophoros Sardelis, chief of Greece’s
Public Debt Management Agency in 2001, said the benefit of the
transactions involved were “trivial.”

Nonetheless, Merkel called the allegations a “scandal” and charged
that Greece had “falsified statistics for years.” The EU’s statistics
office, Eurostat, has ordered Athens to hand over information on the
currency swaps, amidst reports that failure to comply satisfactorily
could see Greece taken to the European Court of Justice, where it
could massive fines.

Commenting on Goldman Sachs’ involvement, European Monetary Affairs
Commissioner Rehn said that “the banks themselves should also ask, not
least after the financial crisis, if this has been in line with the
code of ethics.”

Given that the accounting shenanigans of the major banks and financial
institutions are directly implicated in the world’s worst economic
crisis since the 1930s, Rehn’s reference to their supposed “ethics”
strains credibility.

So too does Eurostat’s claim not to have known about the swaps until
recently. Several commentaries have pointed to an article by Nick
Dunbar, in the July 2003 trade magazine Risk, which explained, “With
the help of Goldman Sachs, Greece has been using giant swaps deals to
ensure its national debt ratios meet EU targets.”

Papandreou has announced the establishment of a commission to
investigate the transactions. The move is, at least in part, aimed at
convincing his European partners that he will impose the necessary
remedies. At an informal cabinet meeting on Wednesday, the prime
minister said his government was “ready to turn a page” and “curb the
deficits considerably.” His only request was “for the necessary time
to enable us to implement our program.”

http://wsws.org/articles/2010/feb2010/gree-f19.shtml

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