U.S. supports Greek debt restructuring – Merkel: eurozone crisis will last at least another five years.
Athens.- New Democracy and PASOK officials were hopeful over the weekend that the coalition government will receive the necessary support in crucial votes on Wednesday and Sunday to pass the structural reforms and budget cuts demanded by its lenders, and pave the way for the release of the next bailout tranche.
Sources at the two parties told Kathimerini that they expect between 153 and 157 deputies to back the measures. The only way this number could increase is if a solution is found to the objections that Democratic Left, the junior coalition partner, has to some of the labor reforms demanded by the troika. The leftist party has 16 lawmakers.
Sources close to Prime Minister Antonis Samaras said that contact with the coalition parties and the troika would continue until Wednesday’s vote, when the structural reforms will be put before deputies, but it was unlikely that any major concessions would be made. Should Democratic Left fail to support the measures, there is a possibility it will reject the budget, which will be voted on late Sunday. This would likely lead to the party quitting the coalition.
Samaras is hoping that all 127 of his lawmakers pass the measures and that there is enough backing from PASOK deputies as well. The Socialists lost one lawmaker last week and another said he would not back the measures, leaving 31 MPs. PASOK sources said that they expect at least 26 of the party’s lawmakers to back the measures in Parliament, thereby giving the government the majority it needs.
Nevertheless, even this eventuality would leave the government severely weakened and reduced from three parties to just two. Sources suggested that Samaras might seek a way of keeping Democratic Left in the coalition by offering its leader, Fotis Kouvelis, the opportunity to commit in writing to the budget and all the structural reforms bar the changes to labor legislation.
Parliament’s economic affairs committee began debating the 2013 budget on Saturday. “It is easier for someone to believe in Father Christmas than to believe that these will be the last [austerity] measures,” said SYRIZA MP Euclid Tsakalotos.
Main opposition SYRIZA, in an announcement on Saturday, expressed certainty that “the Memorandum’s bankruptcy will drag along with it the supporters (of the latter), while leading the government to a moral and political marginalisation.”
The leftist party grouping also charged that “lies and blackmail must, at some point, come to an end”.
SYRIZA called on all the MPs in the 300-deputy Parliament to have a clear position on the issue.
The dilemma is between the Memorandum and a devastation of Greek society, or, its reversal and a new exit from this crisis strategy … Any other stance is a crime against society”.
A meeting between Prime Minister Antonis Samaras and the government’s economic staff that focused on all pending issues, in light of the tabling of the omnibus bill in Parliament on Monday, as well as of the budget, took place on Friday evening.
In a statement on leaving the Maximos Mansion, Finance Minister Yannis Stournaras stressed that efforts will be made to the last moment for things to be improved and for a rapprochement to be achieved between the government partners.
Attending the meeting, apart from the Finance minister, were alternate minister Christos Staikouras, the president of the Economic Experts Council Panos Tsakloglou and close associates of Samaras.
US TREASURY OFFICIAL
Europe must support debt-riddled Greece as it struggles to undertake tough reforms under an international bailout program, a senior Treasury official said Friday.
The official, speaking on condition of anonymity, said the Obama administration has been following the discussions between Greece and the so-called “troika” of international lenders — the IMF, the EU and the ECB — “very closely.”
“The troika and Greece are close to an agreement on the reforms commitment necessary to complete the pending program review” of the troubled eurozone nation’s performance under the bailout program, the official said in a conference call with reporters.
“It is extremely important that as Greece undertakes these continued very challenging reforms… Europe comes together in support of these reforms, and helps Greece stay on the path of sustainability,” the official said.
The Treasury official’s remarks suggested the International Monetary Fund, the European Union and the European Central Bank should agree to restructure Greece’s debt.
Governments in the eurozone are still holding to the line that there can be no question of restructuring Greek debt again, since this would mean losses and costs for their taxpayers and would increase political tensions.
Greece’s negotiations with its international lenders for a vital installment of rescue funds needed before bankruptcy looms in mid-November are stuck, the IMF said Thursday.
The IMF said talks stalled over the conditions for financing Greece, as it seeks a two-year extension to meet fiscal goals.
Greece and the troika have been locked for weeks in discussions on revising terms for the country’s bailout, after it fell short of targets which had to be met for the release of the next installment of funds from the three lenders.
Greek Prime Minister Antonis Samaras has said the coffers in Athens will run dry on November 16 — when a three-month treasury bill worth five billion euros must be repaid — unless his country receives the next 31.2 billion euros (40.1 billion) in rescue funding.
Eurozone finance ministers are due to make a final decision on the payout by November 12. AFP
Mrs Merkel said that though Europe was on the right path to overcome the crisis, she added: “Whoever thinks this can be fixed in one or two years is wrong.”
“We need a long breath of five years and more,” she told a conference in Sternberg, Germany. “We need rigor to convince the world it’s worth investing in Europe.”
Two years ago some heavily indebted European countries were dragged into the turmoil that first gripped global financial markets in 2007.
Greece in particular has been struggling with the austerity conditions imposed on it by countries such as Germany.
But Merkel told a regional meeting of her Christian Democratic Party on Saturday that the time had come for “a bit of strictness.”
Otherwise, she says, Europe won’t be able to attract international investment.
Data on Friday showed that that eurozone’s manufacturing sector contracted for the 15th month running in October as output and new orders fell.
Manufacturers were the driving force behind the bloc’s recovery from the last recession, but the downturn in factory activity that began in smaller periphery countries has now engulfed core members Germany and France.
“The manufacturing sector opened the final quarter of 2012 on a disappointing footing, as the downturn in the sector gathered pace,” said Chris Williamson, chief economist at data collator Markit.
“The national data also paint a bleaker picture. The ongoing weakness of the periphery is being combined with hollowing out of the previously strong core of France and Germany.”