Coalition under pressure from left-wing parties


ANALYSIS:Brinkmanship in Athens is due to rising pressure on the government over austerity, writes DAMIAN Mac CON ULADH

WITH THEIR economy faltering and a bond repayment date looming, Greeks once again find their country the focus of intense European and international attention as their government is presented with even more unpalatable austerity demands by the EU-ECB-IMF troika.

The country’s debt inspectors are seeking state spending cuts of €3.3 billion – or 1.5 per cent of GDP – this year before they approve a second bailout loan of €130 billion. If those billions come through, Greece will be able to stave off default in mid-March, when it faces a €14.5 billion bond repayment deadline.

Officials from the troika have also set their sights on rewriting Greece’s private-sector labour rights. They are seeking a one-fifth cut in the minimum monthly wage to €600; a one-quarter cut in pensions; and the abolition of the so-called 13th and 14th salaries – “bonuses” paid at Christmas, Easter and during summer but which Greeks see as integral to their income.

The new catalogue of demands have left Greeks, who are facing a barrage of unpopular taxes on their incomes and properties, feeling even more vulnerable and confused. Much of the goodwill they extended to former central banker Lucas Papademos when he replaced George Papandreou as prime minister less than three months ago has been wiped out.

Papademos’s three-way coalition of Pasok, New Democracy and Laos has also been greatly distracted by the prospect of a general election in April. In Pasok’s case, there is the additional diversion of who will take over from Papandreou as party leader.

The realities of parish-pump Greek politics have meant that, apart from enforcing budget cuts, Papademos has achieved little of his reform programme, which was largely inherited from Papandreou and based on the negotiations held last October for a second bailout.

Moves to deregulate the country’s myriad closed professions have stalled. Last month, the votes of rebel Pasok and New Democracy MPs helped bring down a Bill that would have liberalised pharmacy opening hours, for example.

It is still uncertain whether the elections will take place, but across the country political machines are being greased up in preparation for voting day.

Pasok, elected in a landslide in October 2009, is trailing fifth in the polls. Faced with a surge in support for left-wing parties, which could take 40 per cent of the vote, coalition MPs will do anything to survive, even to the point of rejecting the new bailout programme or the debt-swap deal still under negotiation with private lenders.

It is this reality that coalition party leaders are trying to address with their brinkmanship over whether to add their signature to the troika’s new demands.