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Reichenbach: “Greeks Cannot Take More Sacrifices”

“Greeks have undergone great sacrifices and Greece can not continue with this strategy.” Horst Reichenbach, head of European Commission’s Task Force, was revealing while he was talking at an event organized by the Board of Commerce and Indtustry of Athens (EBEA). He noted that at the centre of the action of Task Force were the reforms in the public administration and changes in the taxation system. “The weight of the disposable income of the Greeks is twice that of the Portuguese and three times larger than the Spaniards, and as a result there is a decline of demand. I’m sure in the next few days the uncertainty surrounding the participation of Greece in the euro will be removed.”

Reichenbach revealed further that ” liquidity is the biggest obstacle for changes in the situation in the Greek economy” but he seemed confident about the future ” Once the PSI and the new memorandum (i.e. the second bailout agreement) are completed, we will then to recapitalization of the banks so that they support the Greek economy,” he said.

While Reichenbach seems to understand the key to the problem (income losses, lack of liquidity, recession, consumption in decline) the Troika pressures for further wages cuts in the private sector apparently to boost competitiveness. A demand that also caretaker PM Lucas Papademos fully agrees with and tries to persuade the coalition government partners to agree on it as well. How the economy will work with people working for nothing and spend money they do not have for the shake of competitiveness, it’s a miracle that only the Troika Gods could think of… Unless, the target is to create a small slavery protectorate in the heart of the euro zone. Three peanuts for salary and the nutshells spent to boost their economy…

Horst Reichenbach gave an interview to German state television ARD. He said more or less the same things. “With austerity programmes hitting Greek household finances hard, public opposition to reform is not surprising” Reichenbach said and urged the international community to show patience.

Economic reforms in highly indebted Greece are coming along slowly, but the Greeks have made many sacrifices and people must be patient, the head of the European Commission’s special task force to help rebuild the Greek economy said on Thursday.

Speaking on German television, Horst Reichenbach stressed the need for a quick agreement and continued disbursement of bailout payments.

 “No one I speak with dares to imagine what would happen if the coming weeks do not lead to a good result, if the private banks’ participation cannot be agreed and if the next tranche of aid is not paid out,” he said on German state television  ARD.

With austerity programmes hitting Greek household finances hard, public opposition to reform is not surprising, he said.

“It’s clear the Greeks have been forced to make enormous sacrifices, and in many areas,” he said. “So strikes and demonstrations are not so surprising.”

“On the other hand, the political class knows that it must negotiate, that it must perform, that it must convince creditors, and that something must change in Greece.”

He also urged patience from the international community.

“Things are moving ahead slowly. We should not expect any miracles. We must be more generous as far as time frames go when it comes to Greece’s reforms,” he said.

He said that part of the problem lay with Athens’ struggles in implementing reforms but he praised the progress Greece had made so far during the euro zone debt crisis.

“The Greeks are good at making plans but not so good at implementing them. Our job is to implement existing plans, to advance this capacity and strengthen it,” he said.

“Greece has got up from the floor and more structural funds have been mobilised, which is exceptionally important during the current credit crunch.” (REUTERS)

PS Mor eone more time, I have the slight suspicion that there is a misunderstanding about reforms Greece’s lenders have in mind, Greek Politicians and professional unionists thinking about and what Greek citizens have in mind. Unless they all agree what is has to be reformed the gap will be widening and nothing will happen. With or without the Troika’s leash…

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  1. I was puzzled by a sentence, but I guess there is a mistake:

    it should not be “The weight of the disposable income of the Greeks”
    but “The weight on the disposable income of the Greeks”

    It makes then more sense!

  2. Thomas, actually, when you say, “It makes then more sense!”, should read, “It then makes more sense”.