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Eurozone crisis: Greeks try to snatch defeat from the jaws of victory

Dissenters began to attack new belt-tightening measures to enable Greece to get its €130bn rescue almost as soon as the deal was done

In the end the squabbling political leaders in Athens did what they were always going to do: they opted to save Greece from the economic Armageddon that an assured default would have meant if the debt-stricken country had decided not to accept the tough conditions attached to further funds from the EU and IMF.

But no sooner had the Greek government announced that decision , with IMF chief Christine Lagarde rushing to describe it as “very encouraging news”, than the wrangling began all over again. One after another, politicians rushed to disassociate themselves from measures that might have averted bankruptcy – Greece has to pay €14.5bn of maturing debt next month – but at the price of throwing the country into a dark age of austerity, bereft of any hope of growth or development.

Minutes after the government triumphantly sealed the deal, deputy labour minister Yannis Koutsoukos resigned. He blasted the belt-tightening reforms Athens had accepted in return for €130bn in rescue loans as being not only painful but “anti-constitutional” and in violation of international law.

Ignoring counter-proposals and the argument that further austerity will deepen Greece’s already severe recession, foreign lenders, he said, had blackmailed officials into accepting the accord. On the other side of the political spectrum, Yiannis Manolis, a senior unionist in the conservative New Democracy party, also resigned, saying policies that included a 22% cut in the minimum wage would ensure that Greeks were reduced to living on “Bulgarian salaries in a country with Brussels prices”. Aleka Papariga, the communist party leader, warned of “all-out war”. After two years of being subjected to relentless tax rises, wage and pension cuts, the prospect of state entities being closed, with mass sackings, loss of benefits and even lower wages would prove the tipping point for Greeks. “They want us to live in Dachau, in concentration camp conditions,” she said.

The intra-party wrangling – highlighted by the extraordinary drama of negotiations that were constantly delayed – does not bode well for the upcoming vote on the debt deal in parliament this Sunday.

With elections looming, senior MPs in all three parties backing prime minister Lucas Papademos’s interim coalition threatened to reject the draconian terms attached to the release of further aid.

Many believe that come June, when Greece will face yet more bond repayments, pressure will mount yet again to rein in its runaway budget deficit with even more belt-tightening.

In the runup to Sunday’s vote, trade unions representing civil servants and workers in the private sector also pledged to bring the country to a standstill with a 48-hour general strike. Their promise came barely two days after the last stoppage. Violence cannot be ruled out when mass protests are held outside the Greek parliament. “They have pushed us too far,” said Ilias Iliopoulos at the public sector union Adedy. “The social explosion is coming.”

If there was any sense that the brinkmanship on display in the last few weeks is over, it was put to rest when Laos, the junior party in the ruling coalition, said it had not even been informed about the bailout agreement.

It had played no role in resolving the issue of cuts in supplementary pensions, the final obstacle to consensus being reached over the accord.

“We’ve had no contact all day with the prime minister’s office,” said Nikos Vasilliades, a party spokesman. “The deal only represents the two main parties, Pasok and New Democracy.”

The president of the European Central Bank, Mario Draghi, cheerily announced hours after news of the deal came through that, finally, “the pieces of the puzzle” in Greece were all coming together. With more Greek drama beckoning, that is very unlikely to be the case. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds