Despite a second bailout package from international lenders, doubts persist on whether the funds are enough to stave off economic collapse in Greece.
A 130 billion-euro package from international lenders was approved on Tuesday (February 21st), but the country is still negotiating a write-down of as much as 70% of its debt -- about 107 billion euros.
"I'm not excited about this agreement," University of Ioannina economics professor Dimitris Hatzinikolaou told SETimes. "It means first the creditors will be paid and then if there's any left over it goes to pensioners and salaries."
Hellenic Foundation for European and Foreign Policy Director-General Thanos Dokos was cautiously optimistic, but said Greece must reform and stimulate growth, and cannot rely on bailouts or more austerity measures to survive.
"It will buy us time, but the question is what do we plan to do with it?" he said of the second bailout in three years.
"If we keep functioning under the same conditions of the past, inevitably there will be a collapse," he told SETimes.
Eurozone leaders approved the second bailout even as the first -- 109 billion euros from the EU-IMF-ECB Troika -- failed to slow Greece's slide towards insolvency.
Austerity measures have created a deep recession of 20.9% unemployment, and have led to the closing of more than 111,000 businesses.
Interim Prime Minister Lucas Papademos, however, hailed the agreement. "It's no exaggeration to say that today is a historic day for the Greek economy. We now have the ability to progress with stability, to limit uncertainty and to increase trust in the Greek economy in order to create better conditions."
He warned that Greece could have been forced out of the eurozone if it did not agree to the Troika's terms -- which include a 22-32% reduction in the minimum wage, the elimination of collective bargaining rights for workers and 150,000 public worker layoffs over the next three years.
Greece will be required to put the new loans into a special account and pay back creditors first -- only then can the country pay workers and pensioners and use any leftover monies for government purposes.
The Troika has been trying for two years to keep Greece from going under, in the face of protests, riots and strikes that brought down the previous government of Socialist leader George Papandreou. But some analysts said the very austerity measures it demanded will push the country deeper into recession and make a recovery unlikely.
Athens-based Institute for Economic Relations Director Haralambos Tsardanidis said Greece shouldn't be left for dead.
"We should be very happy about the agreement and that it has been achieved, because it was difficult," he told SETimes.
Tsardanidis warned though that if not enough creditors agree to voluntarily take part in the write-down, "Greece could make it compulsory and that would automatically trigger a default. If the recession continues to be this deep, the agreement will be in trouble."
IMF head Christine Lagarde said there are still great risks that Greece's economy will not grow as much as its international creditors were hoping. "It's not an easy [programme]; it's an ambitious one," she said.
What Greece needs now is to build trust and accept that lenders want to monitor Greek spending and to be repaid first, said Kostas Ifantis of the Hellenic Centre for European Studies in Athens.
"The major deficit is credibility," he told SETimes. "The Europeans have done the best they can in terms of financing the Greek debt."
The severe conditions, he said, are part of the game. "Some say the package saves the banks, but what was the alternative? This time we have no choice."
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Distributed via Southeast European Times