Talking from Kastelorizo, Greece’s tiny, easternmost island on 22 April 2010, Greek Prime Minister George Papandreou spoke of a new Odyssey as he asked for the EU financial aid mechanism put in place to support his debt-hit country to be activated. He acknowledged that the markets did not respond to the EU agreement of 11 April 2010 that was hoped to ease the pressure on the embattled Greek economy.
Market Pressure on Greece
If there were some hoping that the EU financial mechanism and the IMF involvement in Greece’s internal affairs could be averted, the reaction of the markets left no breathing space. Greece’s financial woes were far from over as the Greek total debt as proportion of GDP was revealed on 22 April 2010 to be higher than thought.
Eurostat revelations that Greece’s budget deficit is actually 13.6% of Gross Domestic Product (and not 12.9% as previously thought) caused the financial crisis that has engulfed Greece to worsen even further: the FTSE 100 index in London lost all its early gains reflecting the uncertainty of the markets. Spreads climbed to 608. However, the Prime Minister’s speech that is signalling Greece’s joining of the financial mechanism is already easing the pressure.
By triggering the aid mechanism the Greek Prime Minister is hoping to create “a safe harbour” where “a new boat can be built using sturdy and reliable materials” (Eleftherotypia, 23 April 2010). Whether the aid mechanism is sufficient remains to be seen. IMF and EU involvement in the country’s internal affairs is seen by a big proportion of the Greek public as humiliating. The country’s is shaken by several strikes and demonstrations against the government’s austerity measures.
The government is under fire by trade unions and the opposition for submitting to the IMF with the Prime Minister contending that this is the only way to avoid a Greek bankruptcy. Debt-hit Greece is not only in the throes of a financial crisis but a deep social crisis as well. The effects of years of economic mismanagement have put in question not only financial malpractices but social practices as well: corruption has permeated Greece’s social fabric for too long.
The news of the Greek Prime Minister’s speech about the activation of the EU and IMF loans has been instantly reported by Greek newspapers, such as Kathimerini and Eleftherotypia, all the major Greek media and there was instant coverage by the BBC, The Times and the Guardian as well as all major news correspondents. In Greece, the day that the aid mechanism was triggered is seen as a historic and sad day. The Greek PM spoke of an new Odyssey on which the Greeks have now to embark on.