September 10, 2012

Greek Opposition Holds Out on Spending Cuts

Says that poorer Greeks must be protected from more austerity

Prime Minister Antonis Samaras of Greece found the going tough over the weekend as he failed to convince all members of his governing coalition that additional austerity measures must be enacted to satisfy the troika and obtain the next tranche of rescue funding. Democratic Left leader Fotis Kouvelis said that the cuts, which Samaras has already called unfair and painful, had not been decided on and that poorer Greeks should be protected from more austerity.

Greek flagBloomberg reported Monday that the lack of consensus was just one of a number of eurozone issues facing action in the week ahead, including a decision scheduled for Wednesday by Germany’s Constitutional Court on the European Stability Mechanism (ESM) and an election in the Netherlands that could tip the scales there away from austerity.

The euro, which had risen initially on the European Central Bank’s (ECB) bond-buying plan, retreated as traders shed the currency in advance of such knotty issues.

Samaras, Kouvelis and Pasok leader Evangelos Venizelos met Saturday to try to reach agreement on 11.5 billion euros ($14.7 billion) in spending cuts required by the troika of the ECB, the European Union and the International Monetary Fund (IMF) before it will release the next segment of money.

However, the attempt failed, and Kouvelis said in the report that the members of the troika, who met with Finance Minister Yannis Stournaras on Saturday, had not accepted all the proposed measures. An unidentified Pasok party official said the troika took issue with approximately 2 billion euros among the proposed cuts. The three Greek policymakers have said they will have another meeting on Wednesday, two days in advance of a meeting of eurozone finance ministers.

“The recession is deep and if these measures aren’t accompanied by growth measures, they will be ineffective,” Kouvelis said in the report. “Our European partners need to know that Greeks can’t take any more. Nothing can be taken for granted.”

Samaras had said that the two years’ worth of cuts, while painful and unfair, are necessary to restore Greece’s credibility in the eyes of the troika so that it can receive additional funding to stay afloat.

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