Wednesday

6th Jul 2022

Greece unveils fresh cuts as euro pessimism spreads

The Greek government has unveiled a fresh round of austerity measures amounting to €2 billion as pressure mounts on the country to deliver on its commitments to reduce its debt-load.

Finance minister Evangelos Venizelos on Sunday described the moves, which will involve a new two-year real estate tax and holding back a month’s pay from all elected officials, as a new “national effort.”

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  • Soldier on guard outside parliament. The Greek government faces growing popular opposition to its austerity (Photo: Nikita Avvakumov)

"We know that these measures are unbearable," Venezelos said, according to local reports.

"But once more, we all have to rally together in a national effort."

"Our immediate priority is the full respect of the budget targets for 2011," he said.

The European Commission welcomed the announcement and said that the ‘troika’ of officials from the EU, the International Monetary Fund and the European Central Bank will return to Greece “in the coming days” to inspect the country’s deficit-slashing efforts.

"I welcome the expressed commitment by the Greek government to fully meet the agreed fiscal targets this year and next, and to take the necessary consolidation measures to achieve these objectives,” said economy commissioner Olli Rehn.

“[The] decisions, including the levy on real estate, will go a long way to meeting the fiscal targets.

But he also stressed that Athens must do more to adhere to commitments made to trim its debt load.

“Greece needs to meet the agreed fiscal targets and implement the agreed structural reforms to fulfil the conditionality and ensure funding from its partners. 

“Once Greece meets the conditions, I expect the review by the troika could be concluded by the end of September.”

The news came as the United States upped the public pressure on the EU to act.

US treasury secretary Timothy Geithner on the weekend told G7 leaders in Marseilles that Europe had “a lot more to do”, demanding that the bloc act with “very, very powerful, unequivocal financial force”.

Separately, in a shock announcement, the ECB’s chief economist, Juergen Stark, quit his post on Friday, reportedly in frustration at the bank’s purchase of peripheral eurozone government bonds, a policy that has cost Frankfurt some €50 billion.

German finance minister Wolfgang Schaeuble said on Saturday that his deputy, Joerg Asmussen, will replace him.

Pessimistic declarations from senior EU figures over the weekend did little to aid matters. Polish finance minister Jan Vincent-Rostowski warned that the euro could not survive if the crisis spreads to larger peripheral states.

“We’ve been saying as the EU presidency this crisis requires more solidarity from the stronger countries, the surplus countries, and of course it requires more responsibility from the weaker countries, he said, speaking at a conference in Poland.

“If the stronger countries are not willing to exhibit that solidarity, then they have to realize the sovereign debt crisis that started in a small and non-essential country like Greece could spread to Italy and Spain, and there is no way—there is no way—the euro zone can survive a crisis in Italy.”

The minister, whose country holds the six-month rotating EU presidency, hit out at rumours that core eurozone states could split off from the single currency.

“Do the surplus countries of the north really want to create their own currency and find it appreciating like the Swiss franc? You can ask the Swiss what the consequences would be,” he said.

French foreign minister Alain Juppe also issued a stark warning on Sunday, adding to calls in recent days for greater fiscal policy centralisation in the EU.

"We certainly cannot allow the sole currency to fall apart because falling apart would apply also to Europe as a whole," he said visiting Australia.

“The sole currency cannot really function unless there is economic power and European government as such around the Eurozone,” he said.

Brussels calls for still more austerity

Most states have slashed tens of billions from their public spending plans already, but this may not be enough according to an annual report from the EU executive.

Brussels: No plans being made for Greek default

The European Commission has denied it is making preparations for a Greek default after a series of comments by German authorities indicated Berlin is readying itself for precisely such a situation.

Merkel, Sarkozy: ‘Future of Greece is in euro’

German Chancellor Angela Merkel and French President Nicolas Sarkozy attempted to calm market anxiety over a possible Greek default on Wednesday evening, affirming their commitment to Greek membership of the euro.

Rising prices expose lack of coherent EU response

The increasingly sharp debate over the rising cost of living exploded in European Parliament, with lawmakers from all stripes, liberal, left, green and conservative, calling on the EU to act.

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