Greek anger as EU plots a power grab
CROWDS of at least 30,000 have been gathering in Athens’ Syntagma Square over the weekend in the country’s biggest protests so far, as reports circulated that the crippled nation would have to give up sovereignty over its privatisation scheme to receive any more bailout money.
Meanwhile, it emerged that the EU is currently putting together a new bailout package worth around €65bn (£56bn), which would bring Athens’ total rescue funds to €175bn.
Markets are also on tenterhooks to see the results of the IMF’s fiscal review of Greek finances in the next few days, with investors focused on whether it will admit to a funding gap for 2012.
If so, it would mean that Athens had violated the terms of its original €110bn bailout, under which it was to return to private markets for funding next year, and would mean that the IMF is unable to pay out the next tranche of aid, worth €12bn.
Economists at ING said; “The choir of voices claiming that the emperor has no clothes is growing… The debt-to-GDP ratio is heading to 160 per cent over the next three years.”
To tackle its enormous debt pile, the Greek government has outlined plans to sell €50bn worth of assets, including ports, railways, gas companies, water utilites and defence firms.
Yesterday, a spokesman for the European Commission denied that the EU or IMF have demanded that an international authority administer the sale or the collection of taxes, as some had suggested, saying: “ I don’t think you can do that in a sovereign country.”
Kathleen Brooks, research director at Forex.com. said: “This type of ‘help’ is exactly what Greece needs at this stage of its financial rehabilitation; however it would be a big step that could jeopardise the economic sovereignty of Greece.”
But ING’s Peter Vanden Hout cast doubt on the importance of the asset sell-off: “A privatisation programme would clearly buy time but is no guarantee for success… In that regard, the idea of a (voluntary) debt restructuring is unlikely to disappear,” he said.
A recent opinion poll showed that Papandreou’s Socialist Party had lost its lead for the first time since its election in 2009.