Anger, Tension Rise In Debt-Ridden Greece
JACKI LYDEN, host:
This is Weekend Edition from NPR News. I'm Jacki Lyden.
We begin with economic news both here and abroad. First, the finance ministers of the 17 countries in the Eurozone met today in Luxembourg. They're expected to approve the next installment of nearly $17 billion of a total $155 billion bailout agreed last year for debt-ridden Greece. The meeting comes after a week of social and political turmoil in Athens.
Popular anger is mounting over the tough austerity measures imposed by the European Union and IMF in exchange for the bailout. And the beleaguered socialist prime minister was forced to reshuffle his cabinet and call for changes to the country's political system.
NPR's Sylvia Poggioli joins us from Athens. Hi, Sylvia.
SYLVIA POGGIOLI: Hi, Jacki.
LYDEN: The austerity measures are so unpopular that the prime minister faced a rebellion within his own Socialist Party ranks. What changes will the government reshuffle bring about?
POGGIOLI: Well, Prime Minister George Papandreou is certainly weakened. In a move aimed at stifling dissent within his Socialist Party, he sacked the finance minister, who had been the architect of the five-year austerity program. And Papandreou replaced him with one of the austerity package's harshest critics and his biggest rival within the party, Evangelos Venizelos.
Before leaving for Luxembourg for today's meetings with the Eurozone finance ministers, Venizelos said he will seek some improvements in the conditions set down by the EU and IMF, for what he called social justice.
And today here in Athens, opening a three-day parliamentary debate, Papandreou called for a referendum on changes to the political system - including the constitution - that would make it easier to have more flexibility in the labor market. He blamed Greece's bloated public sector for contributing to the current crisis, and he said that a constitutional change will also help prosecute corrupt officials.
LYDEN: How likely is it that this new finance minister can actually get softer conditions from his European partners?
POGGIOLI: Well, it's very hard to say, but the government is under intense pressure from Greek public opinion. For the last three weeks, Athens' central Syntagma Square has been occupied by demonstrators. Violence did break out one afternoon last week but generally, it's been very peaceful. The demonstrators include large numbers of just ordinary folks, families with children, elderly pensioners. And in the evenings, the numbers swell to the thousands and thousands.
After a year and a half of drastic budget cuts and tax hikes, they've come to protest a record unemployment rate of 16 percent - it reaches 44 percent among the young - and there's growing poverty. The demonstrators were inspired by similar protests in Spain against austerity measures there, and they've totally altered the political balance in Greece.
A poll out today shows that nearly half of Greek voters want parliament to reject a new round of budget cutbacks in return for a second bailout of $170 billion, and over two-thirds support the ongoing protests.
LYDEN: Sylvia, just quickly remind us of some of the measures the government has implemented.
POGGIOLI: Well, it cut the budget deficit by 5 percent of GDP. It cut salaries of public-sector workers and pensions up to 20 percent, and it raised value-added tax on many products. But it has failed to sharply reduce tax evasion, and this is a country where a quarter of a population never pays a single euro to the state. Privatization of state assets has also stalled.
So Greek protesters say the ones who have been hardest hit by the measures are wage earners, while rich professionals have been almost untouched. And they complain that rich people have been taking their money out of local banks. In fact, the European Central Bank says that the equivalent of a quarter of Greece's GDP has left the country since the crisis began.
So Papandreou's government is facing, at the same time, intense demands from public opinion to let up on the austerity measures, and strong pressure from the EU and IMF to apply even more radical reforms.
LYDEN: Sylvia, how can such a weak government fulfill international demands?
POGGIOLI: Well, many analysts believe that even the new government can't last long, and they predict there will be early elections within a few months. But you know, a long period of paralysis could cause further panic in the markets and yet paradoxically, that could prove to be to Greece's advantage because the specter hanging over Europe - and beyond - is the terror that Greece will default. A Greek default would be devastating for the banks that hold Greek debt - in particular, French and German banks. There would then be the risk of contagion spreading to Portugal, Spain, and even Italy and Belgium.
LYDEN: NPR's Sylvia Poggioli, speaking with us from Athens. Thanks very much.
POGGIOLI: Thank you, Jacki.
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