Photo: AP/Dimitri Messinis
Although hopes for a positive outcome in Greece were buoyed by news that Greek politicians had come to an agreement on austerity measures yesterday, that enthusiasm has quickly vanished.Eurozone finance ministers rejected the deal in its current form, saying that it still didn’t go far enough in cutting down Greece’s unsustainable public debts.
German Finance Minister Wolfgang Schaeuble estimated that Greece’s public debt could remain as high as 136 per cent of GDP in 2020 according to Bloomberg, despite strict stipulations that Greece bring its public debts down to 120 per cent by that year.
Markets are sour, the euro is diving, and suddenly the picture no longer looks rosy in Greece.
We’ll keep you up to speed throughout the day right here with all the latest news coming out of Greece.
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UPDATE (8:25 AM ET): Violence has broken out again, with hooded youths throwing stones and police firing grenades in Syntagma square. This comes as workers begin a 48-hour strike sponsored by the country’s two large umbrella unions.
UPDATE (8:33 AM): Greek cabinet members will meet at 1 PM EST on whether to endorse those measures. Despite fissures in the ruling coalition, they are likely to go through with this
UPDATE (8:41 AM): This photo from Associated Press shows petrol bombs exploding outside the Finance Ministry today.
Photo: AP/Dimitri Messinis
UPDATE (8:53 AM): LAOS party leader George Karatzaferis said he can’t agree to the new austerity agreement. According to AMNA news, ministers from that party have submitted their resignations to the prime minister’s office.
UPDATE (9:02 AM): Reuters reports that Greece’s police union wants to arrest EU and IMF officials for their austerity demands. It obtained a copy of a letter from the Federation of Greek Police outlining this anger:
“Since you are continuing this destructive policy, we warn you that you cannot make us fight against our brothers. We refuse to stand against our parents, our brothers, our children or any citizen who protests and demands a change of policy…We warn you that as legal representatives of Greek policemen, we will issue arrest warrants for a series of legal violations … such as blackmail, covertly abolishing or eroding democracy and national sovereignty.”
The threat is more symbolic than realistic, the report says, since a judge would have to first authorise any warrants.
UPDATE (10:30 AM): This AP photo has garnered some attention, as it demonstrates Greek anger towards new austerity demands from the German-led troika.
Photo: AP/Petros Giannakouris
UPDATE (10:40 AM): According to the Guardian, there are rumours now that another Greek minister has quit—this time Deputy farm minister Asterios Rodoulis. Some video of the protests and today’s events is available on the Guardian’s website.
UPDATE (11:15): The Greek government is falling apart. Not only has Bloomberg confirmed the resignation of the farm deputy, now it reports that the Greek foreign minister just resigned as well.
State broadcaster ANA is saying that Greek PM Lucas Papademos will announce a cabinet reshuffle. That could jeopardize the bill on austerity measures and consequently disbursement of the next bailout.
UPDATE (11:24 AM): A few more details about some of those resignations, from the English-language arm of Greek newspaper Kathimerini:
Three Popular Orthodox Rally (LAOS) MPs have resigned from the Cabinet but two have said they will go against their party leaders’ wishes and vote in favour of Greece’s new loan agreement.
Transport Minister Makis Voridis, Deputy Merchant Marine Minister Adonis Georgiadis and Deputy Agriculture Minister Asterios Rondoulis tendered their resignation after LAOS leader Giorgos Karatzaferis said that he would not support the loan agreement following lengthy negotiations this week.
However, in their resignation letters, Voridis and Georgiadis, said they would vote for the new bailout on Sunday.
UPDATE (11:45 AM): European markets closed a few minutes ago, and it wasn’t pretty. The Athens Stock Exchange fell the most, but stock markets closed negative across the board.
UPDATE (12:15 PM): In a conference today in Singapore, Fitch managing director Tony Stringer said that if Greece doesn’t get its act together soon, it probably won’t have enough time to avoid disorderly default. From Capital.gr:
“They must get this deal agreed really within the next few days to enable them sufficient time to do the paperwork and have the new bailout money disbursed before that bond is due,” Tony Stringer, a managing director at Fitch, said in a conference in Singapore today. “If they don’t manage to achieve that, then it could be in the realms of a disorderly default.”
…”The manner of the default and whether Greece can stay in the euro zone are critically important too, to the future of the single currency,” Stringer said today. “If there is a negotiated agreement then we don’t think that’s going to be a particularly negative development for markets, it would be a positive development.”
UPDATE (12:33 PM): According to Athens News, PM Papademos arrived at parliament to begin a crucial cabinet meeting. There were reports that this meeting would be broadcast live, but it looks like we might just get highlights at the end of it.
UPDATE (12:46-12:57 PM): PM Papademos has emailed a statement from the meeting, and it has been obtained by Bloomberg. Papademos has apparently ordered government ministers to approve the austerity plan, saying “whoever opposes the bailout does not belong in government.” However, he wrote that he was certain cabinet ministers would do their duty.
He adds that the loan plan will secure Greece’s place in the euro, and that a disorderly default would cause social and economic chaos. Papademos noted that the troika plan accounts for a recovery in 2013 after another year of recession, and growth of 2.5% in 2014 and 2015.
Even more than that, he says that the eurozone’s finance ministers held up a decision on the loan agreement because of political uncertainty. (Funny, but we didn’t think that was the reason they gave…)
UPDATE (1:53 PM): The New Democracy and PASOK parties pushed meetings on the new austerity measures scheduled for today to tomorrow as the government struggles to deal with cabinet resignations, public angst, and EU leaders’ latest demands, Athens News reports.
Elswhere in the eurozone, Standard & Poor’s just cut the ratings of 34 Italian banks.
UPDATE (2:48 PM): It’s unclear when exactly those austerity measures will be put to a vote in front of paraliament, but a number of prominent international and Greek news organisations are saying “Sunday or Monday.”
Protests, too, will continue into the weekend, as the 48-hour general strike continues. Greek newspaper Kathimerini reports that there will also be a rally in front of parliament beginning at 5 PM local time (10 AM ET). According to the same report, there were six people arrested and two people injured today in clashes between “self-styled anarchists” (not your typical protesters) and the police.
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