It’s doubtful many of his austerity-fatigued compatriots will believe him, and unclear how much more pain Greek society will be able to take before it unravels completely. BY HENRY CHU | LOS ANGELES TIMES ADVERTISING LONDON — The massive new
BY HENRY CHU | LOS ANGELES TIMES
LONDON — The massive new bailout approved for Greece early Tuesday should rescue it from immediate bankruptcy. But can the country survive being saved?
No matter how you cut it — and plenty is being cut — Greece is still only at the beginning of a long-term retrenchment and reform program that will inflict yet more pain on its people, who already have seen their living standards plummet.
The question, analysts say, is whether the country can come out the other side of the process with its democracy, economy and society all intact.
From almost unprecedented infringements on national sovereignty to a radical overhaul of the economy, the $170 billion bailout program approved by European finance ministers — its second for Greece in less than two years — will leave little of Greek life untouched. Yet even backers of the plan can’t guarantee that it’ll succeed in the face of fearsome market, political and popular pressures.
“There are downside risks — this is clear. It’s not an easy program,” said Christine Lagarde, the head of the International Monetary Fund. She was one of the bleary-eyed negotiators who emerged from 13 hours of talks in Brussels, Belgium, to announce the new rescue package.
In exchange for the billions of dollars in emergency loans, plus the forgiveness of more than $100 billion in debt owed to private bondholders, Greece has committed itself to years of brutal public spending cuts that will slash wages and pensions and push tens of thousands of people out of work.
It also has pledged to such measures as privatizing state assets, liberalizing the labor market and modernizing its tax-collection system, all of which would, in theory at least, make Greece more productive and competitive.
But the package put together by Greece’s Eurozone partners, led by fiscal disciplinarian Germany, remains focused on ever-greater austerity as a means of reducing government debt and deficit, with virtually nothing to encourage economic growth in the near term.
Many Greek citizens and analysts feel the country is being condemned to a slow and excruciating death as the economy keeps shrinking and the mountain of debt becomes correspondingly larger. Greece is being subjected to shock therapy, they say, only without the therapy.
That helps explain why there was little jubilation in Athens over the eleventh-hour deal to save it from default, even though the pugnacious finance minister, Evangelos Venizelos, tried to sell it to his fellow Greeks as a “new opportunity” to reinvent their country.
It’s doubtful many of his austerity-fatigued compatriots will believe him, and unclear how much more pain Greek society will be able to take before it unravels completely.
