When it comes to the troubles facing the European common currency, optimism has been the name of the game. Politicians from capitals across the Continent have repeatedly insisted that the euro will be just fine and that Greece, facing the severest of European debt crises, will pull through.
But on Wednesday, there were signs that the high hopes are beginning to crumble. Greek Prime Minister Giorgios Papandreou intends to announce a major cabinet reshuffle on Thursday a day after talks between his Socialists and the conservatives led by Antonis Samaras to form a national unity government collapsed. During the course of those talks, Papandreou reportedly offered to resign.
In addition to increased pressure from the opposition, the prime minister is also facing a revolt from within his own party as he attempts to push through a new five-year austerity package. The package is a key condition for Greece to receive the next tranche of the 110 billion international bailout package passed a year ago. But on Tuesday, a Socialist parliamentarian rebelled, declaring himself an independent. Another said he refuses to vote for the package and on Thursday, two additional Socialist party deputies resigned from parliament, shrinking Papandreou's parliamentary majority to just a handful of votes.
Indeed, observers say that the defections place Papandreou's cabinet reshuffle plans in doubt. "It will be very hard now to find good people to form a government," former Finance Minister Stefanos Manos told Reuters. "They don't trust Papandreou after all the flip-flops he has made."
On Wednesday evening, Papandreou announced plans to hold a confidence vote in parliament, likely prior to next Tuesday. The austerity package needs to be passed by the end of June to ensure adequate funding.
Of equal concern, however, is that Greeks themselves appear to be losing patience with their government. Wednesday saw a widespread general strike paralyze the country's public transportation system in addition to large protests in the capital, which turned violent at times.
The country's largest private bank, the National Bank of Greece (NBG), has also begun selling off its holdings of Greek bonds, a 180-degree change of course. In 2009, the bank increased its bond holdings to 18 billion in part to "support the market," it said at the time. According to the bank's quarterly report released on Wednesday, however, NBG has shed 4.8 billion worth of bonds and plans to continue its sell-off.
The government wrangling in Athens comes at a time when the euro zone is attempting to reach agreement on yet another bailout package for Greece as its finances continue to spiral out of control. It has become universally accepted that Greece will not be able to return to the financial markets in 2012 as planned and will need further European and International Monetary Fund assistance. European finance ministers, however, have yet to reach agreement on the degree to which private investors will be asked to participate in any debt restructuring plan.
German commentators take a look at the situation in Athens on Thursday's editorial pages.
Conservative daily Die Welt writes:
"The protests in Athens are sending a disastrous signal to the rest of Europe. They give the impression that many Greeks are still denying reality. And they are taxing the good will of European taxpayers. The rest of Europe, after all, can do much less about the misery in which Greece finds itself than the Greeks themselves. Still, they must show their solidarity and loosen up substantial sums of money to plug holes in the Greek budget -- money that they already know may not ever be repaid in full. The deal with Greece is unpopular across Europe, particularly in Germany where necessary, yet painful reforms were passed several years ago under Chancellor Angela Merkel's predecessor Gerhard Schröder. But they are also unpopular in Eastern Europe, where countries used the economic crisis to push through draconian austerity measures. The least that we should be able to expect of our Greek fellow Europeans is that they fulfil their part of the deal. Otherwise, European leaders, out of fear of their own citizens, will no longer find the courage to continue throwing good money after bad in Greece."
Center-left daily Süddeutsche Zeitung writes:
"The most reasonable next step would be for Papandreou's Socialists to build a unity government with the opposition conservatives instead of triggering new elections. A new vote should eventually take place, but not immediately, because a campaign would only deepen Greece's already significant split and would do nothing to solve the country's debt crisis. Whether there are chances of agreement between the country's two largest political camps, however, is not at all certain. The opposition has already started the campaign and is demanding as the price for its cooperation new negotiations with the European Union on the strict austerity package. But without this package, which has already been finalized, the EU will not grant Greece additional aid."
"For the EU, the situation has reached a dead end. The dramatic apex of the crisis is thus also a moment of truth."
The financial daily Handelsblatt writes:
"The pressure in the euro cooker is climbing, as is the threat of an explosion. The Greek people are taking to the barricades because the country's elite are failing shamefully. Many rich Greeks are still not paying any taxes and have taken their fortunes abroad. The country's political parties have become embroiled in small-minded power struggles and have hinted -- in denial of reality -- that painful savings measures may not be necessary after all. A large share of the country's political and economic leadership prefer to save themselves rather than to fix the damage they have cause to the state and to the economy. Prime Minister Papandreou and Finance Minister Giorgios Papaconstantinou are surely honorable people who have tried their best. But in such surroundings, they cannot win the fight against the debt crisis."
"Nobody knows what the future holds for Greece. The conservative opposition has refused to support the austerity package negotiated with the European Union and the International Monetary Fund. Such an irresponsible denial of reality not only damages the conservatives in their own country, but it also harms the common currency union and the European Union. One wonders if a party which behaves in such an anti-European manner should still be welcome in the family of European conservative parties."
Center-right daily Frankfurter Allgemeine Zeitung writes:
"The systematic corrections taking place in Greece, under the leadership of the Papandreou government, are understandably unpopular. Many Greeks, however, understand that the country must change. This silent societal group -- whether it's a majority remains to be seen -- is largely invisible. It is mostly the opponents to modernization policies which have been audible and visible. Their actions have found a disproportionate echo in the media. In reality, the vehemence of the strikes has ebbed -- and it wasn't even all that impressive to begin with. Fewer and fewer Greeks believe that the unions have a solution. Their leaders have lost repute just as much as the politicians."
Left-leaning daily Die Tageszeitung writes:
"The Greek protest movement has so far developed no ideas on reforming the country. They are generally speechless on the subject. Still, it would be unfair to blame the demonstrators for this poverty of ideas. They have so far been left to their own devices by the country's politicians. Particularly the conservative opposition has been a complete failure.... Not one single constructive proposal has come from their ranks. Instead, they have opted for obstruction, even though they, under their ex-Prime Minister Kostas Karamanlis, are responsible for having taken on a large part of the debt that is now driving the country into insolvency."
"The Greek society threatens to break apart and to be consumed by mistrust. As such, it would make sense if were Papandreou to offer his resignation to allow the formation of a national unity government. Should such a government actually come to pass, however, it would be confronted by the exact same problem that makes the demonstrators in front of the parliament building so speechless: Greece really is broke. No austerity program can change that."
-- Charles Hawley
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