GREECE - 
Three months into a historic rescue program worth €110 billion - about $140 billion at the time, and half of Greece's gross domestic product - the government exceeded the deficit-cutting benchmarks set by the I.M.F. The tough new austerity measures met angry resistance in a country where one out of three people is employed in the civil service, which until now has guaranteed jobs for life. The shake-up of Greece's public sector represents one of the biggest overhauls of the country's welfare state in a generation. Demonstrations claimed their first fatalities on May 5, 2010, with three people reported to have died inside a bank building set ablaze by protesters as workers across Greece went on strike. Protests became relatively restrained after that. But almost a year after the bailout, the Greek economy continued to sag under 340 billion euros in debt. The tax increases and spending cuts imposed as part of the austerity package sent the economy far deeper into recession. Greece’s economy shrank 6.6 percent in 2010, far more than the 1.9 percent decline in 2009. Some economists are forecasting a 4 percent fall in 2011 before a mere 2 to 3 percent drop in 2012.
Three months into a historic rescue program worth €110 billion - about $140 billion at the time, and half of Greece's gross domestic product - the government exceeded the deficit-cutting benchmarks set by the I.M.F. The tough new austerity measures met angry resistance in a country where one out of three people is employed in the civil service, which until now has guaranteed jobs for life. The shake-up of Greece's public sector represents one of the biggest overhauls of the country's welfare state in a generation. Demonstrations claimed their first fatalities on May 5, 2010, with three people reported to have died inside a bank building set ablaze by protesters as workers across Greece went on strike. Protests became relatively restrained after that. But almost a year after the bailout, the Greek economy continued to sag under 340 billion euros in debt. The tax increases and spending cuts imposed as part of the austerity package sent the economy far deeper into recession. Greece’s economy shrank 6.6 percent in 2010, far more than the 1.9 percent decline in 2009. Some economists are forecasting a 4 percent fall in 2011 before a mere 2 to 3 percent drop in 2012.
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The European Union is racing to draft a second bailout package for Greece to release vital loans next month and avert the risk that the euro zone country will default, officials said on Monday.
“I am quite optimistic,” the chairman of euro zone finance ministers, Jean-Claude Juncker, said after discussing further aid for Athens with the French president, Nicolas Sarkozy, in Paris.
A total restructuring of Greece’s debt was not an option, he said, leaving the door open to some tweaking of Greece’s debt profile that might involve the private sector, as Mr. Sarkozy advocated last week.
Greece’s conservative opposition, meanwhile, demanded lower taxes as a condition for reaching a political consensus with the Socialist government on further austerity measures, which Brussels says are essential to secure any further assistance.
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