Feverish shuttles between Athens, Brussels, Washington and Berlin run on this Saturday, which may be decisive for the future of Greece. The representatives of the supervisory Troika from the European Union, European Central Bank and the International Monetary Fund seem determined to push the government of Lucas Papademos with its back up against the wall in order for it to fulfil it promises to the creditors. At lunch the Finance Minister Evangelos Venizelos had a video conference call with his colleagues from the Eurozone. He had to meet with them personally on Monday, but since Greece is still far away from reaching an agreement, the Eurogroup meeting was postponed for Wednesday at the earliest.
At 5:30 pm Evangelos Venizelos went to Prime Minister Lucas Papademos to inform him of the outcome of the video conference call, and at 7 pm in the afternoon the Prime Minister will receive representatives of the supervisory Troika Poul Thomsen from the International Monetary Fund, Klaus Masuch from the European Central Bank and Matthias Morse from the European Commission. The meeting takes on a whole new dimension if we take into consideration the information released yesterday on Mega TV. At the last European Union leaders' meeting on Monday when Lucas Papademos tried to speak to Angela Merkel she replied that she will only talk with representatives of the Troika.
And they in turn remain adamant in their demand to the Greek Government to cut the 13th and 14th salary in the private sector, to remove the lowest salary and to limit expenses in the public sector. The Troika also insists on reducing the cost of weapons by 400 million Euros over the next two years, to reduce health care costs by 1.1 billion Euros, to merge state enterprises and to layoff staff.
However, party leaders, who support the office of Papademos, do not agree with those measures. The Prime Minister was to meet with them today, but postponed the meeting until tomorrow at 1:00 pm. In order for Greece to obtain the new 130 billion Euros aid package, political leaders need to sign the measures and certify that they will support and implement reforms demanded by the Troika. Even the former Prime Minister and current leader of the Socialists George Papandreou, whose government signed the contract for the first bailout package of 110 billion Euros and paved the way for the second one, now speaks out against the Troika.
He opened another war front against creditors insisting that any financial assistance obtained by Greek banks should be accompanied by nationalization. Greek banks, which have purchased large quantities of government bonds, are the biggest victims of the cutting of Greek debt. In order to stand on their own two feet they will need about 15 billion Euros recapitalization, which will come from the new rescue package. Despite the numerous allegations by Poul Thomsen, that the supervisory Troika does not recommend the nationalization of banks, because the Greek state has proven to be a bad manager, Papandreou said yesterday that he will not back off insisting on the nationalization of financial institutions. His remarks immediately plunged bank shares, which in recent days had enjoyed the upward development on the Athens Exchange.
For his part, New Democracy leader Antonis Samaras also set conditions before the Troika and says he will not agree with cutting public sector wages and reducing pension benefits. The conservatives are against cuts in staff and public sector organizations.
Against this background, negotiations with private creditors for the cutting of the debt look like an innocent game. Today in Athens are the Executive Director of the Institute of International Finance Charles Dallara and the president of Deutsche Bank Josef Ackermann, who will have to finalize the details of the PSI.
"Basically the situation in Greece is very unstable. They will go bankrupt. In practice, they are already bankrupt," said the Nobel laureate Paul Krugman in Moscow. For the forum "Russia 2012" Krugman also said: "The question is whether they will come out of the Euro. At this point it is more likely than not to leave the Euro."