Greeks Agree To Austerity With E.U. And IMF

After marathon talks, Greek politicians finally agreed to tough austerity measures to qualify for another bailout from the European Union and International Monetary Fund. The measures will likely pass parliament, but it remains to be seen whether the deal can save Greece from eventual bankruptcy. The Greek finance minister flew to Brussels to see if the deal really will pass muster with the E.U.

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From NPR News, this is ALL THINGS CONSIDERED. I'm Audie Cornish.

ROBERT SIEGEL, HOST:

And I'm Robert Siegel. After marathon talks, Greek politicians finally agreed today on tough austerity measures. They include cutting wages and layoffs for thousands of public workers. The agreement qualifies Greece for another bailout from the European Union and the International Monetary Fund. The austerity measures will likely pass parliament, but Joanna Kakissis reports that it's no sure thing this deal can save Greece from bankruptcy.

JOANNA KAKISSIS, BYLINE: Even before political leaders finally signed off on the austerity measures, the Greek finance minister left for Brussels to brief his European Union partners. The minister, Evangelos Venizelos, was visibly exhausted after a long night of drama. He told reporters that the coalition government finally realized it had to put politics aside and accept the tough conditions of the new bailout.

EVANGELOS VENIZELOS: (Through Translator) This will determine whether the country remains in the Euro Zone or whether its place in Europe will be endangered. We must look Greeks in the eye, look at the national interest and the interests of our children.

KAKISSIS: But politicians know that, even if the new austerity plan is in the national interest, it will be a hard sell. Unions are planning to protest tomorrow and Saturday ahead of parliament's vote on the bailout and elections are coming up this spring.

The European Union knows that, too. Analyst Wolfango Piccoli of the Eurasia Group in London says officials in Brussels believe no Greek politician really wants the responsibility for enforcing the painful wage cuts.

WOLFANGO PICCOLI: Without the sense of ownership, there is no way this program can succeed.

KAKISSIS: In Greece, politicians don't want to take the blame for austerity, which brought down the socialist government of former premier George Papandreou. The deputy labor minister has already resigned today. Unemployment has reached 20 percent and half of homeowners say they won't be able to pay their mortgages.

As Piccoli notes, Greece is in the fourth year of a deep recession.

PICCOLI: And, certainly, the problem here is that, still, there is no light at the end of the tunnel. There are no gross is nowhere to be seen. Certainly, not this year and there's a huge question mark about next year, as well. So the question is really how much more (unintelligible) time for austerity the Greek public has at this stage.

KAKISSIS: Politicians like Antonis Samaras have spent the last two years opposing austerity and he may be the next prime minister. And Piccoli says European officials know that Samaras may not even want to negotiate with them. That could mean a chaotic default, a still real prospect despite today's agreement.

Economist Panos Sakoglu(ph) has an idea of what such a default would look like.

PANOS SAKOGLU: The state would not be able to pay pensions or salaries of civil servants and so on.

KAKISSIS: Then, if Greece is forced to revert to its old currency, the drachma, there will be a run on banks to withdraw the remaining Euros, he says.

SAKOGLU: The (unintelligible) knows that (unintelligible) will impose less a severe limitations to the amount that people will be able to withdraw from the banks.

KAKISSIS: It's a bleak scenario that also frightens European Union leaders. They're worried that a Greek default will spread to other indebted Euro Zone countries, like Portugal and Spain. Just hours after Greek politicians sealed the new deal, Germany's finance minister questioned whether they had done enough to justify a new bailout.

For NPR News, I'm Joanna Kakissis in Athens.

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