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Greece is not able to pay its debts and it makes no sense to grant new loans to it, say GRReporter readers

22 August 2011 / 18:08:26  GRReporter
4046 reads

Victoria Mindova

This summer, the European Union states are convinced that Greece's debt crisis is only the tip of the iceberg that could bury the euro zone. After many hardships, exhortations and endless hesitations, the leaders in Brussels agreed to provide long-term financial support of Greece for more than a decade. It includes not only low-interest loans from the member states, but preferential buy-back of Greek government bonds, which have had negligible market value almost two years already and have become the toxic derivative of the euro area.
The closed doors of the capital markets coupled with the growing discontent in the European taxpayers and the absolute lack of political will for radical changes in the Socialists have left only one option before the Greek Prime Minister George Papandreou: to start a hard campaign to raise new bailout after the failure of Memorandum 1. It happened. After its adoption at the end of June 2011, another Greek Minister of Finance came and said that after signing the arrangement, Greece is the most financially stable country in the unstable euro area, but few believed him.

All financial analysts agree that the second aid package would not be necessary if the Greek government had fulfilled its obligations under the first agreement. However, major reforms in areas of most concern to the local economy like public administration, health and education were not made in the past two years. As a result, the rescue efforts thrown for the recovery of the country were assessed as insufficient and it became clear to all that more money should be flown in Greece until the situation improves.

Meanwhile, Prime Minister Papandreou, who takes himself as foreign minister too, won the fame of a guest in the country he governs. The Greeks often joke that it is news when Papandreou is in Athens rather than on a visit in any other capital city in the world, although he has three deputy foreign ministers. His diplomatic skills, but also the danger of a chain reaction in the euro area made the international powers to rethink their severity and save the country for the second time since 2009.

Greece reached the largest financial assistance agreement signed in the world by now - for € 158 billion in aid by 2020. € 109 billion is the package from the euro area states and the International Monetary Fund. Another € 38 billion will come from the participation of private holders of Greek government bonds and about € 12 billion will be saved by the swap with new bonds of lower than the face value.

However, the way this agreement was reached turned out to be Pyrrhic victory, because the private holders of Greek government bonds are not competing for haircutting the debt to them, and countries such as Finland, Slovakia and others ignored the decision of the summit held on 21 June 2011 and asked for additional guarantees for the financial support to Greece. Moreover, with the adoption of the austerity plan as a condition for the granting of the additional aid, the Greeks themselves agreed on a long-term economic diet and spiral recession with no prospects of recent growth.

Asked "What do you think of Greece’s lobbying for financial support?", most GRReporter readers responded that what was made is not enough and it was made too late. Almost half of the Bulgarian readers believe that Greece will never pay the debts it accumulated and it is meaningless to grant new loans to it. The same is the opinion of one-third of the English readers of GRReporter and 28% of the Greek ones.

"If Papandreou has spent the same time and efforts for reforms instead of lobbying, Greece would have emerged from the crisis" is the second most popular response. This is the opinion mainly of the Greek visitors of the site who voted in our poll. 53% of them are sure that Papandreou’s European and transcontinental touring is at the expense of the economic recovery of the country and agree that the lack of focus on the pressing problems have led to the need for lobbying and new aid. One third of the English-speaking readers and 23% of the Bulgarian voters agreed with this viewpoint.

The answer that "The financial support for Greece comes from the pockets of European taxpayers and there should be control over its spending" seems quite reasonable. However, 23%, 13% and 5% of the readers in the Bulgarian, English and Greek versions respectively supported this statement. We should note that the number of supporters of the idea of ​​control over the spending of the international financial aid is insignificant in the Greek version. Apparently, 95% of the Greeks surveyed believe that the financial aid should be allocated as goodwill and the control by the European Commission, the European Central Bank and the International Monetary Fund is unnecessary.

The last option in our analysis, but the first in the survey, was: "Prime Minister Papandreou is doing his best to help his country." Only 7% of the Bulgarian voters, who are aware of the burden of transition periods and the enthusiasm of the Balkan statesmen for serious reforms, believed this tale. Only 4% more or 11% of the Greek readers shared this view. Most credulous in the Socialists turned out to be the English readers of GRReporter as 22% agreed that George Papandreou has been working from morning till night in the last two years and doing his best to help his broken country.

Whatever lobbying tools the Prime Minister George Papandreou and company used to receive the significant financial aid, it seems that the Greeks are dissatisfied with him. Rumours of early parliamentary elections are growing and GRReporter invites you to participate in our next poll "What do you prefer to be name of the next Prime Minister of Greece?"

Tags: EconomyMarketsAnalysesPollGRReporterDebt crisisGreeceLobbying
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