Sarkozy echos Germany ’s hard line on Greek debt crisis

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Papandreou in Paris
Sarkozy echos Germany’s hard line on Greek debt crisis
By Antoine Lerougetel
9 March 2010

French President Nicolas Sarkozy met with Greek Prime Minister George
Papandreou at the Elysée Palace on Sunday and echoed German Chancellor
Angela Merkel in insisting that Greece deal with its debt crisis by
imposing a brutal austerity program on the working class.

Sarkozy met with Papandreou for an hour, after speaking with Merkel
for nearly as long on the telephone. Last Friday, Papandreou visited
Merkel in Berlin as part of a tour of major capitals to solicit
political support for his government, which faces growing resistance
from Greek workers and youth. On Tuesday he will meet with President
Obama in Washington.

Following the lead of Merkel, Sarkozy made no offer of financial
assistance to Greece.

Last week, Panandreou, who heads the social democratic PASOK party,
announced a program of wage and benefit reductions for public service
workers, a rise in the retirement age, and new taxes on consumers that
will save an estimated €4.8 billion. The package was even more servere
than one he had announced earlier.

Under pressure from international banks and European governments,
Papandreou has pledged to reduce the Greek budget deficit, currently
running at 12.3 percent of gross domestic product, by 4 percent of GDP
this year.

The social democratic government faces a rising wave of popular anger
and working class protest. One-day general strikes have been called
for March 11 and March 16 by the main trade uinon federations.

The union leaders have signaled their readiness to negotiate on the
terms of the austerity program and continue to give political support
to the PASOK government, but they are under immense pressure from
below to oppose the measures. They are seeking to use partial and
one-day actions to let off steam and prevent working class opposition
from growing to the point of a direct clash with the regime.

The Greek government’s aim is to meet, by 2012, the European Union
requirement that member states hold their budget deficits to no more
than 3 percent of GDP. Among the cuts proposed are a two-year increase
in the retirement age to 63, a public sector wage freeze, an increase
in the value added tax and taxes on fuel, and mass sackings of private
contractors working for the government.

Sarkozy, standing beside Papandreou, declared, “Greece has acted
courageously and with determination and consequently can count on
France’s full support.”

The French president is working with the trade unions in France to
impose similar austerity measures. The government submitted its
stability programme for 2010-2013 to the European Commission in early
February. It foresees a reduction in the French public deficit from
8.2 percent to 3 percent of GDP by 2013, entailing a cut in government
spending of €100 billion.

Papandreou pointed out that he had acted above and beyond the
requirements of the bankers and the European Union. “Our country has
engaged in measures which are more extensive and supplementary to what
the specialists have advocated,” he said. He then pleaded for help to
reduce the punitive 6.34 percent interest rate Greece is obliged to
pay for loans—twice the rate that Germany pays. “So we want to be able
to borrow like all other Eurozone countries at a similar rate; perhaps
not identical, but compararable,” he said.

Last week, on the basis of its austerity programme, Greece was able to
borrow €5 billion on the financial markets. But as the business daily
Les Echos pointed out, “Athens is going to have to borrow some €20
billion more by the end of May and nobody can say that the government
will be able to do so with the desired conditions.”

Many commentators have pointed out that even greater sacrifices will
have to be made by Greek workers.

While adamant on his refusal to spend money on alleviating social
hardship in France, Sarkozy felt obliged to show that France and
Germany would act against a massive wave of speculation by American
and European banks and hedge funds against Greek sovereign debt, which
threatens the survival of the euro currency itself. He declared that
it was not just Greece’s future which was at stake, but Europe’s. “The
euro is our currency, it is our responsibility,” he said.

In remarks directed against US banks, he said he had spoken on the
phone with both Merkel and Jean-Claude Junker, president of the
Eurogroup, adding, “We are ready and very determined. The speculation
which is working against Greece can happen to many countries if we do
not have the means to fight it. We must not add a financial crisis to
an economic crisis, itself created by financial excesses on the other
side of the Atlantic.”

Sarkozy insisted that the US-dominated International Monetary Fund
(IMF) should not intervene in the European debt crisis, declaring, “It
is the Eurozone which must come to the aid of its members who are
under attack. … This does not mean defiance directed against anyone. …
It’s a matter of being logical, coherent.”

He aligned himself with German Finance Minister Wolfgang Schäuble, who
told the German Welt am Sonntag that the euro region should consider
creating an organization with powers similar to the IMF. The IMF is
known for the ruthlessness of the austerity and privatisation
programmes it imposes on countries forced to have recourse to its loans.

While refusing specific financial support to ease Greece’s debt
crisis, Merkel and Sarkozy have pledged political support—implying
that any repression by the Greek state to suppress working class
opposition to the austerity programme will have German and French backing.

“If Greece needs us, we will be there,” Sarkozy said. Such promises
must be understood in the light of the close surveillance of the Greek
government’s fiscal actions by specially-appointed European Union
commissioners, akin to colonial overseers. These measures conform to
calls for the creation of a permanent “federal” Eurozone body with
powers to discipline member countries. Such a body would be dominated
by Germany and by France, the largest economies of the Eurozone.

An article posted on the site of Terra Nova, a French Socialist Party
think tank that counts IMF head Dominique Strauss-Khan as a leading
member, said of the Greek austerity programme, “These emergency
measures will, all the same, not suffice.” It called for “structural
reforms indispensible for Greece to return to more sustainable public
accounts,” and for the EU to “establish an economic government which
would coodiniate European action.”

Between 1967 and 1974, Greece was under military rule. The Greek and
European bourgeoisie may well feel that if PASOK, aided by the unions
and the pseudo-left parties grouped in the SYRIZA alliance, cannot
hold back the working class, such repressive forms of rule will be
necessary.

This is a high-risk strategy. The French press and some government
ministers have expressed anxiety at the categorical refusal of Merkel
to bail out the Greek government, fearing that a Greek revolt will
spread to France and beyond.

The conservative daily Les Echos reported March 5, “Christine Lagarde,
the French minister of finance, would like the European Union, all the
same, to offer Greece more ‘explicit’ aid.” Its editorial added that
an austerity plan in France similar to that in Greece “would
immediately bring a million demonstrators onto the streets of Paris. …
Angela Merkel will have to learn not to say ‘nein’ anymore, but
‘nai’—‘yes’ in Greek.”

The business daily La Tribune’ s editorial of March 4, while approving
of the austerity measures, stated, “Now, let’s try to imagine what
that would mean at the French level. … That’s a nightmare we would
quickly like to chase away.”

The Libération editorial of March 5 similarly warned of “the
indignation of the peoples.”

Sarkozy and Merkel have made clear that, regardless of such concerns,
they are determined to press ahead.

http://wsws.org/articles/2010/mar2010/papa-m09.shtml

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