What amounts to a referendum on euro membership will be held in Greece this weekend as the parliament there votes on the austerity measures agreed by the country's leading politicians yesterday. Hopes the package of cuts and other austerity measures would be enough to persuade European finance ministers to release a new tranche of financial aid to meet the country's next debt repayment were dashed over night. Instead, eurozone politicians refused to make the €130bn payment until the new cuts had been passed into law by the Greek MPs, effectively holding a gun to the country's legislative. Europe also wants another €300m plus of cuts and a promise reforms won't be unwound after elections. Jean-Claude Juncker, the prime minister of Luxembourg, summed up the hardline stance of eurozone leaders fed up with Greece's failure to deliver on fiscal reforms. "In short: no disbursement without implementation," he insisted. So with a second general strike planned today in Athens in opposition to the cuts in wages, pensions and state spending, it's going to be another frantic few days in the eurozone crisis. Greece is well established on the road to a disorderly default and is playing a game of chicken with eurozone leaders over whether they will be willing to see Greece leave the euro. The emerging sense is that, actually, Germany and France would be willing to see Greece exit (and Portugal for that matter) so they could circle the wagons around Italy.
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Friday, February 10, 2012
What amounts to a referendum on euro membership will be held in Greece this weekend as the parliament there votes on the austerity measures agreed by the country's leading politicians yesterday. Hopes the package of cuts and other austerity measures would be enough to persuade European finance ministers to release a new tranche of financial aid to meet the country's next debt repayment were dashed over night. Instead, eurozone politicians refused to make the €130bn payment until the new cuts had been passed into law by the Greek MPs, effectively holding a gun to the country's legislative. Europe also wants another €300m plus of cuts and a promise reforms won't be unwound after elections. Jean-Claude Juncker, the prime minister of Luxembourg, summed up the hardline stance of eurozone leaders fed up with Greece's failure to deliver on fiscal reforms. "In short: no disbursement without implementation," he insisted. So with a second general strike planned today in Athens in opposition to the cuts in wages, pensions and state spending, it's going to be another frantic few days in the eurozone crisis. Greece is well established on the road to a disorderly default and is playing a game of chicken with eurozone leaders over whether they will be willing to see Greece leave the euro. The emerging sense is that, actually, Germany and France would be willing to see Greece exit (and Portugal for that matter) so they could circle the wagons around Italy.
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09.33 The euro is down from two-month highs, at $1.3270, as fears of a messy Greek default persist. Many investors will have gone home last night thinking the funding package was finally sealed but alas no.
09.27 European markets are still lower, down by less than 1pc across the board. Meanwhile news that protestors have gathered outside a London branch of Barclays. Pics to follow
Urquhart Stewart, director at Seven Investment Management, is sceptical that Greece has the ability to implement austerity measures on the scale demanded by the rest of the eurozone:
We know they're (Greece) not going to be able to fulfill the expectations and even if they do sign up for it they won't be able to carry it out. It seems inevitable Greece is going to go to a euro lite, or exit the euro altogether.
As Greece moves towards a final resolution, you'll see some nervousness, I don't think that's necessarily a reason to be selling but you might sit on the sidelines and wait for the next news to come through. Use the volatility
Mohamed El-Erian, chief executive of Pimco, the world's largest bond fund, examines the Greek dilemma in an article in today's FT:
Greece’s seemingly endless negotiations stem from two factors that threaten to derail the deal long before any of its durable benefits materialise. First, it is never easy to reach agreement among parties that have very different perceptions of both the problem and its solution. This is especially true in Greece where all three parties to the negotiations (the government, official creditors and private creditors) feel they have already been asked to do a lot, without seeing any actual or potential reward for their sacrifices.
Successive Greek governments have been forced into several rounds of austerity measures in the past two years. Yet still every meaningful indicator of Greece’s economic and financial state has worsened. This sad reality is also relative to what was anticipated in the recent series of adjustment programmes.
After this weekend's crunch vote in Greece, the eurozone policy makers have agreed to reconvene for yet more emergency talks on February 15 as we move inexorably closer to the March 20 deadline when a €14.5bn Greek bond payment comes. Failure to meet that payment by Athens would then trigger a huge sell off in other government bonds issued by Italy and Portugal.
Citizens speak: We have turned fifty years back."
"A cold war [has erupted] with our lenders."
Helena confirms that another MP, Pavlos Stasinos, has just resigned from the socialist Pasok party in "disgust" over the agreement. Throughout the morning MPs have been ringing into radio shows to have their voices heard -- the vast majority being far too afraid to be seen in public .
Many said they would vote with their "conscience" come Sunday when the controversial loan agreement is put before the Greek parliament for endorsement. The effects of the accord, they argued, would be as bad as bankruptcy itself.
"If we vote these measures through we are setting in motion the bankruptcy of our country," said Odyyseus Boudouris, a parliamentarian with the socialist Pasok party. "The dilemma we are faced with is awful and wrong. But bankruptcy won't just be bad for Greece, it will be bad for our partners in the EU."
Maria Verivaki has got in touch to report that there is disruption in the city of Hania, on Crete:
main roads closed in hania centre of town due to marches, approx 800m stretch; my cabbie husband simply avoids this road
Another reader in Greece, James Wilkins, says he would be happier if "this charade" was over, and Greece had defaulted:
It will mean many horrible years for the Greeks, but at least the world will have to find another country to scapegoat.
The Greeks will survive, they always do, but other eurozone countries, including Germany, and Britain and America too, will struggle. I look forward to the time when Greece has forgotten this experiment with borrowed capital ( from which other countries benefited) and goes back to being what it once was - a poor little country on the south of Europe where people, despite the poverty, enjoy life.
9.58am: Greek media are reporting another resignation over the austerity plan -- Pavlos Stasinos, a Pasok (socialist) MP. That would be the third since Greece's leaders agreed to the draft agreement. Yesterday, a Pasok deputy labour minister and a New Democracy deputy both quit, saying they could not accept the demands being made on the Greek people
source ...guardian UK... to layoffs! No to salary cuts! No to pension cuts! Do not bow your heads! Resist!
Teachers, hospital staff and bank employees are all joining in the strike, although we don't get have details of how many people are taking part in the industrial action.
There were marches on the streets of Athens on Tuesday during another general strike -- turnout wasn't as high as at some previous demo's, partly due to heavy rain in the city. Today's marches will be closely watched to show the level of public anger.
9.04am: We recently created a Flickr page called "Greece - life in an economic crisis", where readers can upload their own pictures from the country (hat-tip Laura Oliver). It's still open – Greek readers might wish to upload their images.
8.59am: If you're in Greece today -- we'd be very grateful to hear how the strike is affecting you. Are you taking part? Do you support the action?
Let us know in the comment below, or via email (graeme.wearden@guardian.co.uk) or Twitter (@graemewearden).
Many thanks again if you helped out with this on Tuesday.
• The European Central Bank hinted that it could share any profits on its Greek bonds with the rest of the eurozone. However Mario Draghi ruled out taking part in the debt restructuring programme.
• On the UK economic front, the Bank of England raised its quantitative easing programme by another £50bn. It will soon have created £325bn of electronic money. The move came after surprisingly good manufacturing data, and a narrowing of the UK trade gap.
Thanks for reading, and your comments today. I'll be back early tomorrow to carry things on. Good night!
A protester shouts slogans during a rally against austerity measures in Athens. Photograph: John Kolesidis/REUTERS 7.47pm: In Athens tonight, the squabbling has started again between rival political parties – just hours after they appeared to put their differences aside and back the tough austerity measures demanded in return for its second bailout, worth €130bn.
Politicians have been engaged in an unseeemly rush to distance themselves from the deal. As we flagged up at 4.17pm, a deputy minister swiftly quit.
This was followed by the resignation of a senior member of the conservative New Democracy party. Yiannis Manolis claimed the deal would condemn Greeks to "Bulgarian salaries in a country with Brussels prices."
Aleka Papariga, the communist party leader, had already fired up the rhetoric, claiming that international lenders were determined to force the Greek people into "concentration camp conditions."
Bombshell -- George Karatzaferis has declared that he cannot vote in favour of the austerity measures that international lenders insist Greece must accept.
Karatzaferis explained that he believes the road being proposed by the troika is 'not right'.
Karatzaferis's Laos party controls 16 seats in 300 seat parliament. He also explained that he still supports Lucas's Papademos interim government, but wants the Greek prime minister to consider a reshuffle.
12.10pm: Karatzaferis – whose far-right party is the smallest part of the coalition – goes on to claim that the Paol Thomsen, the International Monetary Fund's mission chief to Greece, should be declared "persona non grata".
A junior minister in Greece's far-right party, LAOS, has quit over the thorny issue of austerity measures. Deputy agriculture minister Asterios Rontoulis has already offered his resignation to Prime Minister Lucas Papademos. There are three LAOS members still in government - a minister and two junior ministers - and they're rumoured to be preparing their own resignations. That would force a cabinet reshuffle. Greece isn't the only eurozone country to be hit by protests against austerity measures today. Riot police in Brussels have been drenched by disgruntled firefighters who broke through a barricade near the PM's office.
00pm: And the resignations apparently keep on coming. Greek TV is reporting deputy foreign minister Mariliza Xenogiannakopoulou is stepping down, while AP says two ministers have resigned. No more details on either, and at the moment it's not clear which two ministers AP is referring to.
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