International Herald Tribune
February 6, 2012
Another deadline came and went in Athens as Greece pushed back till Tuesday a meeting of government leaders to agree on a painful set of spending cuts, lest the country be denied another round of European aid and be forced to default on its debts.
Our colleagues Niki Kitsantonis and David Jolly report that Greece will cut 15,000 state jobs this year, against the backdrop of an already ailing economy. Greece’s debt rose to 159.1 percent of gross domestic product in the third quarter of 2011 from 138.8 percent a year earlier, according to data released Monday by Eurostat, the European Union statistical agency.
Angela Merkel, the German chancellor said that time is of the essence and Greece must make agreements with both private investors who hold Greek bonds and with the European Union and the International Monetary Fund.
But many economists argue that the pain in Greece, where unemployment is 19 percent, shows that austerity is the wrong medicine: shrinking the G.D.P. side of the equation makes it harder to bring down Greece’s debt ratio to a more sustainable level, as the country has pledged to do, and adds pressure for additional taxes and spending cuts. It is a downward spiral.
Negotiations over cuts in public and private sector pay stalled on Sunday night, Niki Kitsantonis reported. Prime Minister Lucas D. Papademos instructed party leaders of his coalition government to come to an agreement by noon on Monday before meeting with him later in the day, according to Greek television and reporting by Niki and Rachel Donadio in Athens.
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