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Greek-Troikan War in the Shadow of a “Default” Ultimatum

We could also title this article “Greek-Troijan War” with the Troika being on the Trojan front riding a Trojan horse. A trick-offer apparently aiming  to save the country but in fact targeting to economically destroy the Greek citizens. Dramatic negotiations without results so far are taking place under an extreme time pressure.

Moreover, an ultimatum calling Greeks to capitulate to Troika was issued by the head of the Eurogroup Jean-Claude Juncker who warned “Comply or Default“. In an interview to German magazine Der Spiegel, Juncker said that Greece “will either comply with its creditors’ requirements or default, as it should not expect any additional support from its peers.” He specified that without new rescue programme there will be a declaration for bankruptcy in March.

In Athens the negotiations continued until late Saturday night, but the six-hour meeting between the Troika and prime minister Lucas Papademos ended without results. Fiscal and labour issues are on top of the agenda with  major point of dispute between the two sides being  Troika’s adamant demands for  sharp cuts in wages and pensions. Greece’s lenders want cuts in minimum wages down to 561 euro gross, abolition of the 13th and 14thsalary, 25% cuts in the wages of the private sector and 35% cuts in the supplementary pensions. Pension money that insurers have contributed to the funds monthin monthout for quite some decades. In the mind of IMF/EU and ECB representatives, dumping the wages would boost competitiveness. Young  professionals until 30 years old would work 12 hours for 450 euro net per month , that would translate into some €2 per hour. They could  enjoy a living standard of a third world country in the heart of the euro zone….

Additionally the Troika wants additional measures worth 4.4 billion euro in order to fill budget deficit holes for 2011 and 2012, that will result into brutal cuts in the health sector, among others.

Papademos coalition partners (PASOK, Nea Dimokratia and LAOS) reject any additional measures that would deepen the already deep recession. Furthermore, Nea Dimokratia and LAOS express their intention to give verbal commitments rather than written pledges, while PASOK is willing give a signed written commitment.

Equally difficult were the talks of Finance Minister Evangelos Venizelos with the Eurogroup ministers on Saturday via teleconference. “We are at knife’s-edge” Venizelos told reporters after the meeting, “everything must be concluded by late Sunday.” He described the talks as “difficult” and said that “it’s time for political leaders’ pledges.”

As for the Greek bond swap (PSI)…. our European partners threaten to leave it uncompleted unless Athens will surrender to reforms. “Euro zone is exasperated with Greek lack of progress on reforms” an EZ official told Reuters under conditions of anonymity. The deal  to restructure privately-held debt cannot go ahead  until Greece guarantees it would implement fiscal and labour market reforms needed to secure a second bailout

Negotiations continue on Sunday with Papademosholding a further meeting withthe Troika at 12 noon. Therefore his meeting with the political leaders has been postponed for one more time, for a later point, maybe at 3 pm. The Greek PM is expected to table his coalition partners the painful packagee and seek their committments.

PS If they meet at 3 pm, the meeting will last some 2-3 hours. It hardly fits in my own programme for today though… 🙁

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