Tuesday, September 25, 2012

imf's call for more cuts irks greece

NYTimes | As Greece enters a pivotal week in its economic crisis, tensions between the Greek government and the country’s international lenders have reached a boiling point. The government is resisting a push by the International Monetary Fund to impose additional austerity measures that Greek leaders fear could destabilize the shaky coalition government.

Although those talks are expected to resume later this week, they have been suspended since an angry exchange last week between the Greek finance minister and the I.M.F.’s top negotiator for Greece.
The impasse has elevated tensions here as Greece braces for a nationwide general strike planned on Wednesday that threatens to bring public services to a halt. The Greek people are increasingly angry over the prospect that public salaries and pensions will be cut again in a last-ditch bid to secure a new loan installment of 31.5 billion euros, or $40.7 billion, from Greece’s creditors. 

The Greek prime minister, Antonis Samaras, plans to address the nation this week to bolster support for the austerity package. He has already publicly warned his center-right party, New Democracy, that he will oust lawmakers of the party failing to back the package once it comes up for a vote, probably in early October.
Various European leaders have gone out of their way in recent weeks to voice support for the Greek government, which came to power in June. And they have praised the Samaras government’s renewed commitment to taking difficult steps to revamp the economy despite concern that Greece could be a ward of its euro zone partners for years to come. Chancellor Angela Merkel of Germany has joined France in declaring that Greece must stay in the euro union to avoid even the perception that the union would be vulnerable to a wider breakup. 

In this political calculus, Ms. Merkel and others see Mr. Samaras as the last best hope for Greece. They worry that if the government teeters, new elections might be called in which his party could lose power to the increasingly popular leftist party Syriza, led by the political maverick Alexis Tsipras. Mr. Tsipras advocates tearing up the loan agreement with Greece’s international creditors. That would raise the risk of default and an eventual exit from the euro. 

The situation is also being monitored by Chinese officials, who would be reluctant to see a Greek exit from the euro destabilize the European Union, China’s largest trading partner. 

“We want the euro zone to stay intact,” Du Quiwen, the Chinese ambassador to Greece, said in an interview on Monday. “If something in Europe goes seriously wrong, if there’s a major mishap in the euro zone, it would put pressure on the world economy and it would not be in the interest of the world community or China.”


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