As European Union (EU) leaders met in Brussels with the bailout of Greece a backburner topic, most of Greece’s workforce staged a second national work stoppage in the last three weeks. Tensions in the streets of Athens rose as one man died and three strikers received injuries while 50 protestors were arrested. Protestors hurled anything they could throw at police who were forced to fire rounds of tear gas into the swelling crowd.
The country’s two largest labor unions, ADEDY and GSEE called for the 24-hour strike. Yannis Panagopoulos, the leader of the GSEE’s 2-million private sector members explained the protest. “Agreeing to catastrophic measures means driving society to despair and the consequences as well as the protests will then be indefinite.”
In order for Greece to comply with terms set by the European Commission, the European Central Bank (ECB) and the IMF, commonly called the Troika, Greece must trim another 11.5 billion euros from its budget before another Tranche can be released. These cuts will put the workforce at risk of working for substandard pay that prevents the household from sustaining itself and will further deplete the pensions of today’s workers.
The intent of the EU meeting in Brussels is ostensibly to mend fences so that a banking union can be created. Many participants of the euro zone feel this is a necessary evil but some countries have no interest in participating. As a result, the meetings will be more conceptual than substantive. Usually, these meetings give cause for an optimistic spin but in reality just buy time.
There appear no plans to announce any new programs to deal with the region’s debt crisis. Meanwhile, Greece muddles along mired in the worst economic downturn in the euro zone and worst since World War II. What becomes clear with every national strike is that the working people of Greece cannot survive under the current austerity plan. There is no future, no incentive to excel and little hope for resolution.
This means that the majority of the country’s workforce does not feel the abuse of credit by past governments is their problem. The workforce appears willing to return to their own currency and bid farewell to the Troika and the nation’s investors.
To avoid default next month, the government must push through more austerity cuts or cease to operate. If Greece were standing alone, EU and euro zone members would most likely let the country fail. The problem is that such a failure may take more robust economies down. The largest investors in Greece are France, Germany and the ECB. Yet, it is Spain and Italy that stand most threatened by a failure in Greece.
In support of saving Greece, Italy’s Finance Minister, Vittorio Grilli, told reporters that, “It certainly can be saved and it will be saved.” Grilli indicated that he understood the plight of the nation’s working persons and hinted that more time was needed to allow for a recovery.
In Brussels, France and Germany went toe to toe over differing views of how European Union members should control their budgets and shift to a single banking supervisor. As expected, German Chancellor Angela Merkel seeks stronger authority by the European Commission with the power to veto national budgets that are non-compliant with stated EU guidelines. President Francois Hollande of France said that this was not on the EU agenda for this meeting and should be tabled until a discussion of the creation of a European Banking Union was addressed.
Germany’s position is that the only banks that required supervision are large “cross-border banks.” Merkel rejects the idea that banks in rich countries must prop up deposits to prepare to assist weaker economies.
“We have made good progress on strengthening fiscal discipline with the fiscal pact but we are of the opinion, and I speak for the whole German government on this, that we could go a step further by giving Europe real rights of intervention in national budgets,” Merkel told the Bundestag.
Germany’s proposal to empower a European super-charged European currency commissioner along with a stronger European Parliament is resisted by Hollande because it would call for restructuring of existing treaties.
Another German proposal has been agreed upon by 11 of 17 euro zone members and calls for creation of a European fund to invest in specific projects in member states. The fund would be created by implementation of a “transaction tax.”
If there was good news to be had in the euro zone, it came from an unlikely source, Spain. Moody’s determined that Spain’s debt could maintain its rating as “investment grade.” The 10-year bonds immediately went to their lowest yield since February at 4.61 percent.
The focus of this week’s meeting in Brussels was ostensibly to further the development of a viable central bank for the EU. However, as the pages turn on this concept, there is political theater that will prevent to bank until at least 2014.