Support from Brussels but doubts at home
Greece will not default, nor will it exit the eurozone was on Thursday the message from Brussels, where Prime Minister George Papandreou traveled for meetings with European Council President Herman Van Rompuy and Eurogroup chief Jean-Claude Juncker.
With speculation about whether holders of Greek debt will be asked to accept a major haircut gathering pace, Papandreou discussed the options available to Greece and the eurozone as well as the imminent report from the European Commission, the European Central Bank and the International Monetary Fund inspectors on whether Athens has made enough progress to secure the sixth installment of its loan package.
Papandreou insisted that Greece was committed to the measures required by its lenders. ?The Greek people are determined to make the reforms necessary to make the Greek economy viable and competitive, however painful they are.?
Juncker was adamant that the eurozone would not let Greece leave the single currency. ?This will not happen as it will not happen that we will face a Greek default,? he said. ?Everything will be done in order to maintain the financial stability of the euro area.?
Juncker said that a special meeting of the Eurogroup will be held next week to discuss the troika?s report ahead of an EU leaders? summit on October 23. The Luxembourg prime minister said he was ?really optimistic? that the eurozone would approve the disbursement of the sixth tranche.
Juncker refused to be drawn on the details of the haircut being planned for Greek bondholders. ?It?s not mainly about figures, it?s mainly about content,? he said. ?We need a straightforward plan and I am optimistic that we will be able to decide on a plan.?
At home, Papandreou faces at least two of his 154 MPs voting against one of the articles in a bill submitted to Parliament this week that contains a range of legislation introducing tax increases and public sector reforms.
Former Labor Minister Louka Katseli and deputy Sofia Giannaka have made it clear that they will not approve Article 37, which suspends collective wage bargaining in specific sectors of the economy until 2014. Other lawmakers have also expressed concern that this could be the first step to abolishing national collective contracts and the minimum wage.
Speaking in Parliament, Finance Minister Evangelos Venizelos assured MPs that the government has no intention of scrapping the national contract and that it is under no pressure from the troika to do so. However, he called on lawmakers to be ?realistic,? saying that one in three businesses are not paying their employees and four in 10 employers are not paying their social security contributions. ?A very tough reality has been formed,? he said, suggesting that some wages would have to be reduced.
