Papademos Gets Coalition Gov’ Support – Greece’s Red Lines

Greece’s prime minister Lucas Papademos made his point of view very clear on Sunday after meeting the leaders of the three parties forming his coalition government. “If this process [ PSI, second bailout] is not completed successfully, we will find ourselves faced with the specter of bankruptcy which will have serious repercussions for society and especially for the economically vulnerable.” In a statement televised to the nation, Papademos said further that there is an  “absolute convergence” of opinions between the leaders of the three parties on the measures that need to be taken by Greece in order to avoid bankruptcy

“The political leaders and I have absolute convergence over the continuation of the negotiations and the positions that we will support. We are persuing an agreement with our partners so we can stand on firm ground again, so the uncertainty can end, so trust can be restored and the economy can return to a course of growth and job creation, ” said Papademos adding “The unity of the political forces and their commitment to support the necessary changes are an essential demonstration of our credibility, will boost the effectiveness of economic policy and will allow us to negotiate better conditions.” (Proto Thema, ekathimerini , New York Times )

Greece’s lenders demand additional austerity measures like dumping prices for workers in the private sector, cuts in pensions and massive lay-offs in the public sector. Furthermore, a document obtained by the Financial Times revealed a German proposal according to which Greece should accept a ‘state commissioner’ assigned by the EU; the commissioner should be able to veto Greek government decisions on fiscal issues. A proposal that caused turmoil in Greece and hurt deeply the dignity of the country.

Greece’s Red Lines

Greek media report that Papademos and his coalition partners agreed on two things: To reject the ‘state commissioner’ proposal and the wages cuts in the private sector.

However some major issues arose during the 2.5-hour talks of the coalition partners:

– That it will be very difficult to pass a bill with wages cuts in the private sector through the parliament with MP opposing such cuts.

– That the issue of a ‘state commisioner” is not negotiable and no step back should be made.

– A space for negotiation in the sales of state-run enterprises and partial cuts in the 13th and 14th salary in the private sector. (To Vima)

The question is whether Greece is confident enough to play clever its red-lines cards at the EU Summit on Monday in Brussels. However I see that with the German proposal (official or unofficial) additional  pressure is loaded on the shoulders of Greece. I hope Papademos will not put his talent to solve this issue and forget the rest. This is a win-win or lose-lose game, right?