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updated: 9/8/2012 8:58 PM

Greek PM: Painful cuts will restore credibility

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  • Protesters gather Saturday outside the International Exhibition Center in the northern port city of Thessaloniki, Greece.

      Protesters gather Saturday outside the International Exhibition Center in the northern port city of Thessaloniki, Greece.
    Associated Press

 
Associated Press

THESSALONIKI, Greece -- Greek Prime Minister Antonis Samaras insisted Saturday that the latest package of deep spending cuts, which will once again affect wages and pensions, will be the last, but he also defended the measures as necessary to restoring his country's financial credibility.

The government has endorsed the austerity measures to keep receiving funds from the so-called "troika" of creditors -- the European Commission, the European Central Bank and the International Monetary Fund. Adoption of the package is necessary for the release of a long-delayed (euro) 31 billion ($39.39 billion) rescue loan installment, without which Greece will be forced to default on its loans and may have to quit using the euro.

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"We are now applying the spending cuts (to which) the country had committed itself to reduce its debt, cutting the deficit by (euro) 11.5 billion ($14.7 billion)," Samaras said while opening the 77th International Trade Fair in this northern Greek city. "But I'm telling you these will be the last such cuts."

The new austerity measures are to be implemented over two years -- 2013-14. But with Greece now in the fifth year of a deep recession that has seen its economy shrink by about 20 percent and the jobless rate soar to 24.4 percent in June, people are wary of any new cuts.

A variety of groups staged protest marches against Samaras on Saturday. Farmers smashed watermelons outside the Trade Fair's premises, and anarchists briefly fought with riot police in the evening. But, otherwise, the marches ended peacefully, more so than during previous years.

Samaras was not taking any chances. Breaking with tradition, he made only a cursory appearance at the fair and cancelled the traditional press conference where every premier each year outlines the economic policies of the coming year.

"Mr. Samaras came and escaped in a flash, like a thief," scoffed Alexis Tsipras, leader of the opposition Radical Left Coalition.

Samaras acknowledged that some of the pension and wage cuts were unjust and promised to reverse them once the economy returns to growth.

"To tell the whole truth, the (latest) cuts) involve incomes we should not have touched. We are trying to minimize these painful cuts until the last moment. But there will be some, we cannot do otherwise...we hope these cuts will be temporary," he said.

He said the economic austerity was necessary "to restore Greece's credibility in order to avoid the catastrophe" of an exit from the 17-nation eurozone.

On Sunday, Samaras will meet with the leaders of the two other parties that, together with his conservative New Democracy, support the coalition government: socialist Evangelos Venizelos and Fotis Kouvelis of the Democratic Left.

Both have expressed strong reservations about the cuts in wages and pensions and have called for equivalent spending measures. Venizelos, especially, has said that Samaras ought to have asked for extra time, two years at least, to implement the new cuts. Samaras and his finance minister, Yannis Stournaras, have said that Greece was in no position to ask for an extension without proving it could stick to its commitments.

The troika representatives will meet with Stournaras on Sunday afternoon and Samaras on Monday. The cuts package is expected to be finalized in the coming week and is expected to be approved by parliament.

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