Crisis-hit Greeks sceptical of EU rescue deal

Friday, 28 October 2011 01:36 - - {{hitsCtrl.values.hits}}

Reuters: Greeks greeted the latest European Union deal to rescue their debt-choked country with deep scepticism on Thursday, fearing further painful belt-tightening and years more of recession.

EU leaders struck a deal with banks and insurers early on Thursday for them to accept a 50 percent loss on their Greek government bonds under a plan to cut Athens’ debt burden by 100 billion euros and try to contain the crisis.

The accord follows several rounds of austerity, including hefty pay and pension cuts, tax hikes and plans to shrink the public sector work force failed to put Greece’s finances back on track and dragged its economy deeper into recession.

“I don’t feel saved,” said teacher Pantelis Abeloyannis, 47, a father of three who is struggling to make ends meet and pay his mortgage following heavy pay cuts and tax rises.

“ The banks are not paying for us today. They are just returning a part of the profit they have made from us all these years.”

The EU deal means Greece’s debt burden will now be sustainable, Prime Minister George Papandreou said, and French Finance Minister Francois Baroin said the agreement had saved the euro. Greek banks stocks jumped 13 percent in early morning trade, welcoming the deal.

But in Athens, opposition politicians and people on the streets were much more critical.

“The haircut (loss on bonds) should be judged as a package along with the attached conditions,” Dimitris Papadimoulis, lawmaker for the opposition Left Coalition, told state TV Net.

“Our prediction, and this is why we do not celebrate like the government, is that the new German-style haircut that has been imposed will be followed by even tougher policy against the low- and middle-incomes,” he said.

Many said the deal will not provide any quick fix to a crisis that has mired their country in its worst recession for four decades.

“I won’t see it in my lifetime, Greece freed from its debt monster. I hope my kids do,” said Panos Theodorou, 60, a taxi driver. He did see a silver lining to the deal: “(It) shows the Europeans wanted to keep us in the club. They didn’t want us to leave the euro.”

The EU aims to complete negotiations on the package by the end of the year, so Greece has a full, second financial aid programme in place before 2012.

The value of that package, EU sources said, would be 130 billion euros -- up from 109 billion euros when a deal was last struck in July. That agreement subsequently unravelled after Greece’s financing needs increased as a consequence of a worse than expected recession.

Greece’s international lenders, which saved it from bankruptcy in May last year with a first bailout deal, see its economy contracting by 5.5 percent this year and 3 percent next year, pushing unemployment to record highs.

“The issue is whether this deal will help to open some jobs, I don’t think we will be seeing any pay raises,” said Yannis Mylonakos, 40, who works at a coffee shop.