For the first time the EU administration in Brussels acknowledge that austerity measures imposed on Greece are provoking civil unrest. But despite the growing social turbulence, the structural adjustment is a necessary “investment in the future,” EU officials says, and emphasize that the coming generations will benefit from the bitter pill that citizens are forced to swallow.
“Greece was a country that was living beyond its means for too long.”
“We are aware of the social tensions that exist. This impact from these important reforms is certain, we will not play with words with that,” commission spokesman Amadeu Altafaj told reporters after the EU executive endorsed a review of the country’s programme of cuts on Thursday.
“However, this is an investment for the future, for future generations, for jobs and growth on a more sustainable path,” he added.
“Greece was a country that was living beyond its means for too long and there were too many imbalances in the economy that represented a mortgage for future generations … Yes, there is an impact in terms of growth, jobs, social unrest, pensions that have been cut, but we are in a recovery path in all these areas.”
Greece has seen a series of one-day general strikes since the beginning of the year in opposition to the multiple austerity programmes.
In the spring, three bank workers were killed when a contingent of protesters set fire to a bank during one of the general strikes.
13 Small-Scale Terrorist Attacks
A series of small-scale terrorist attacks blamed on previously unknown left-wing groups have also returned to haunt the country, echoing the “urban guerilla” violence of the 1970’s.
Some 13 incidents, including bombings of political party offices, MPs‘ homes, a bank, the Athens Stock Exchange and government buildings, have taken place.
As austerity measures slash public sector salaries by up to 20 percent, gut retirement benefits and hike up taxes, spending by average Greeks is drying up, exacerbating the crisis.
The country’s GDP has begun to head south much faster than predicted, falling by 3.5 percent in the second quarter compared to last year. some 17 percent of shops in the capital have filed for bankruptcy, according to the National Confederation of Hellenic Commerce.
The official unemployment rate in May (the latest month for which statistics are available) jumped to 12 percent compared to 8.5 percent in May 2009.
For young people, the situation is even harder, with official unemployment for 15- to 24-year-old now standing at 32.5 percent.
In some districts, unemployment has reached up to 70 percent.
The University of Piraeus estimates that in the shipbuilding region of Perama, joblessness has soared to between 60 and 70 percent.
Provoking A Social Explosion
Greece is bracing itself for a hot autumn. After the summer holiday high season, which brings in much of the country’s earnings, a wave of mass layoffs is expected.
Trade unions and left-wing activists have promised a fresh bout of demonstrations and strikes after the break in response. Even within the governing Pasok party, papers are reporting that dissent is growing as some senior members worry the prime minister is provoking a “social explosion.”
In terms of the bail-out, the commission on Thursday signed off on an August assessment by a team of inspectors from the “troika” – the commission, the European Central Bank and the International Monetary Fund, which put together the €110 billion rescue deal.
Other EU states must now also give the assessment the nod in order for the second tranche of bail-out cash to be released. The next tranche is worth €9 billion, with €6.5 billion from euro zone countries and €2.5 billion from the IMF.
Economy commissioner Ollie Rehn said the Greek economy still faced dangers despite the positive report and must “press ahead” with structural adjustment.
“Greece has managed impressive budgetary consolidation,” he says in a statement.
“But despite the significant progress made, challenges and risks remain,” he adds, warning Athens to look to the liquidity of its banking sector and to hitting its budgetary target.
Greek government revenues are nowhere near what Athens and Brussels had expected them to be by now, with extra tax income increasing by just 5.9 percent – “well below the annual target of a 15.6 percent increase,” Mr Rehn says.
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