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Greece Attempts to Pass Another Round of Austerity

The Finance Minister for Greece, Yannis Stournaras, claims that the country will be given more time by its international creditors to reach deficit targets, smoothing out the level of austerity required in the near term. But he might want to tell his international creditors about it.

Greece had been asking for two more years to meet the spending cuts demanded by international creditors.

Despite Mr Stournaras’ comments, European Central Bank (ECB) president Mario Draghi said later he was unaware that an extension had been agreed.

Germany similarly denied the claim. And just a couple hours after telling MPs that Greece secured the extension, Stournaras admitted that they are still trying to win concessions on the package.

Meanwhile, extension or no extension, Greece will include several new austerity measures in their latest budget, despite mass unemployment and depression conditions, to push them closer to the deficit targets set up by their lenders. A draft memorandum leaked yesterday that includes a number of new taxes that probably won’t be collected, another 20,000 in cuts to public employee jobs in 2013, an increase in the retirement age to 67, cuts to health care, welfare and unemployment benefits and an increase in traffic tickets.

But the package’s labor reforms have split the ruling coalition and threaten passage.

Athens says talks have been largely wrapped up and that the package is ready for a parliamentary vote next week, although the small Democratic Left party has refused to back proposed reforms on minimum wage levels and severance payments.

“The only obstacle to an agreement is the Democratic Left’s stance,” Finance Minister Yannis Stournaras told reporters. “I hope that they will eventually agree.” […]

Stournaras had suggested on Wednesday that the package would be split into two separate bills on spending cuts and labor reforms which officials said would allow the Democratic Left to vote against the reforms without jeopardizing the entire austerity package.

But Athens now plans to put the cuts and reforms together in a single take-it-or-leave-it bill, Stournaras said, in a move apparently designed to pressure the Democratic Left into backing the entire package.

The small leftist party, which commands 16 deputies in parliament, has repeatedly said it does not want to topple the government but that it cannot vote on reforms that undermine labor rights which have already been eroded.

The country is in a state of crisis. The unemployed have no health benefits and must pay out of pocket with money they don’t have. And the number of the unemployed continues to rise. Economic growth is not expected for years.

It would have been a better decision for the Greek people to rip off the band-aid and get out of this death spiral known as the euro. Maybe it’s one they’ll eventually take.

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David Dayen

David Dayen