Greek Civil Servants Strike Over Austerity Measures

Greek Civil Servants Strike Over Austerity Measures
By DAN BILEFSKY and NIKI KITSANTONIS
Copyright by The New York Times
Published: February 10, 2010
http://www.nytimes.com/2010/02/11/world/europe/11greece.html?ref=global-home


ATHENS — Striking civil servants brought public services to a halt across Greece on Wednesday, in a largely peaceful one-day protest against the tough austerity measures officials have said are necessary to stave off a mounting financial crisis.

Greece has been under intense pressure from other members of the European Union to cut its huge budget deficit and is in danger of failing to refinance some $28 billion in debt coming due in April and May. Fears of default in Greece and other struggling European countries have roiled financial markets around the world in recent weeks.

But the Greek government’s proposals for deep spending cuts to rein in the deficit have met significant resistance.

“We won’t pay for their crisis!” loudspeakers blared from Klafthmonos Square, otherwise known as “the square of the crying people,” where disenchanted Greek workers have come for centuries to express their discontent. “Not one euro to be sacrificed to the bankers!”

In Greece, commentators said the economic problems had exposed a general ignorance about the harsh realities of the global economy, while laying bare the strong sense of entitlement in a country where one out of three Greeks is employed in a civil service that guarantees jobs for life.

“People in other countries like Germany, France and the United States learned about the workings of the economy the hard way, by seeing their jobs on the line,” said Babis Papadimitriou, an economic analyst at the Skai radio and television group. “This hasn’t been the case in Greece.”

But relatively modest public demonstrations Wednesday — one in the square and another nearby — were tinged with a sense of resignation that megaphones were no match for volatile financial markets.

Indeed, even many of those protesting said they realized they needed to make sacrifices, or risk falling over what Prime Minister George Papandreou, a Socialist, called the “edge of the cliff” last week. Others expressed hope that the European Union would rescue their proud democracy from becoming the next Iceland.

“We feel humiliated and we understand that things cannot remain the same as they were before,” said Vasiliki Revithi, 56, a biochemist at the National Organization for Medicines, noting that a monthly cut of about $950 to her salary would mean no new car and cheaper makeup. “But we gave the world democracy, and we expect the European Union to support us.”

The crisis in Greece is a credibility test for the euro zone, the 16-nation bloc where a one-size-fits-all monetary policy has underlined the challenges of managing disparate economies during an economic downturn. Last week, the anxieties spread to Portugal and Spain, where investors increasingly fear that bloated budgets will not be slimmed. Late last year, Greece stunned investors by saying that its government deficit would be 12.7 percent of its gross domestic product, not the 3.7 percent the previous government had forecast earlier.

The government of Mr. Papandreou appears determined, however belatedly, to challenge a national consensus in which the state has been expected to provide for its citizens from cradle to grave.

“We are ready to take any necessary measures to make sure the deficit goal is met,” he said after meeting with the French president, Nicolas Sarkozy, on Wednesday.

The government has announced $2.75 billion in public spending cuts. It also aims to raise another $6.87 billion from new taxes and measures aimed at fighting tax evasion, which analysts said deprived the federal budget of $44.2 billion last year. It has frozen salaries, increased the average retirement age among men and women to 63 by 2015 and introducing a higher gas tax.

While the changes have hardly been embraced, analysts said they believed that Wednesday’s strikes would not expand into widespread social unrest, provided that the government’s austerity measures produced results. The measures have been approved by the two main political parties. Passage appears certain in Parliament, where the Socialists hold more than half the seats.

Yannis Stournaras, director of the Greek Foundation for Economic and Industrial Research, a leading economic analysis group, argued that a majority of Greeks realized that the future of the country was at stake.

“Greeks would rather see their wages reduced for a few years than to lose their deposits at the bank,” he said. “No one wants for the country to commit suicide.”

He also expressed cautious optimism that European Union leaders, who are to meet Thursday in Brussels to discuss Greece’s economic woes, would not allow the country to default because the credibility of the euro zone as a whole was at stake.

“If the markets turn bad and deprive Greece of liquidity, we can end up with another Lehman Brothers in which the failure of a coordinated response led to collapse,” Mr. Stournaras said. “It will open a Pandora’s Box. The question is who would be next, a small country or a big country. If it’s a big country, then the euro will be in big trouble. I don’t believe European leaders will allow this to happen.”

Analysts said that Mr. Papandreou was determined not to be the first Greek prime minister since World War II to bring the country to economic disaster.

But whatever the political will, however, some economists cautioned that Greece remained at the mercy of investors. Michalis Massourakis, chief economist at a major bank in Athens, Alpha Bank, said the government’s austerity measures — and the tepid response from Brussels thus — had not been sufficiently swift to ease jittery investors.

Noting that the government needed to balance the need for swift action with public sentiment, he added, “The government’s reforms have not kept up with the expectations of the market, because this is not something that can happen in a democracy.”

A picture caption with an earlier version of this article misidentified people attending a rally as public sector employees.