EC keeps Greece on tight rein

European Commission officials last week approved the Stability and Growth Program submitted to Brussels last month by the Greek government and welcomed the additional measures heralded by Prime Minister George Papandreou in a televised address on Tuesday night, but they said they would be keeping a close eye on the implementation of austerity measures and demanding regular progress updates.

The European Union’s Economic and Monetary Affairs Commissioner Joaquin Almunia said Greece’s Stability and Growth Program, which aims to plug a gaping deficit over the next three years, was “ambitious but realistic.”

He also welcomed Papandreou’s heralding of extra austerity measures. Almunia stressed, however, that the implementation of these measures by the government was not going to be easy.

“If the program is followed by decisions, by actions... this will have a positive effect on the market,” he said. “If the decisions are not there, the markets will apply additional pressure.”

The EC expects the first update on the government’s progress in implementing austerity measures by mid-March. After that, it will demand monthly progress reports until May and quarterly updates thereafter.

Almunia stressed that the government’s efforts to meet targets for reducing its bloated budget deficit would be “rigorously monitored through the surveillance procedure.”
But he emphasised the support of Brussels for Greek efforts to get the economy back on track. “The Commission fully supports Greece in this difficult task,” he said.

Mr Almunia’s comments followed the announcement of a series of additional austerity measures by the Greek Prime Minister George Papandreou on Tuesday in a televised public address.

The Greek Prime Minister announced increases in fuel tax, a cut in bonuses to public sector employees, a freeze on all public sector wages and an increase in the retirement age in the public sector.

Papandreou also announced increases in tax on distributed profits that are not reinvested, the taxation of dividends in the way that incomes are taxed and an increase in the taxation of offshore companies.

Prime Minister George Papandreou yesterday heralded the austerity measures – beyond those already outlined in the crisis plan his government has submitted to Brussels – as he stressed the importance of pushing through painful “but socially fair” measures to ensure the country does not “fall off the edge of an abyss.”

In a televised public address given following successive face-to-face meetings with opposition party leaders, Papapandreou asked for broad-reaching support for economic reforms and stressed the importance of accelerating their implementation.

Unsurprisingly, Communist Party (KKE) leader Aleka Papariga and Alexis Tsipras, head of the Coalition of the Radical Left (SYRIZA), were critical of the austerity measures.

Antonis Samaras, leader of the main opposition New Democracy, and Giorgos Karatzaferis, of the right-wing Popular Orthodox Rally (LAOS), were measured in their support for the measures

Workers’ unions were less encouraging in their reception of the government’s bolstered austerity program.

The General Confederation of Greek Labor (GSEE), the country’s main labor union, called a 24-hour strike for February 24.

Papandreou was also criticized by the main civil servants’ union (ADEDY), which has already called a strike for February 10.