Riots to derail reforms
Güncelleme Tarihi:
Reuters
Oluşturulma Tarihi: Aralık 19, 2008 00:00
ATHENS - Greece’s worst protests in decades, which followed the shooting of a teenager, are likely to disturb vital economic reforms. With the global crisis reaching Greece, few observers expect the riots immediately to topple the gov’t, but its survival beyond the next few months is uncertain.
Greece's worst riots in decades are likely to deter political leaders from introducing overdue economic reforms, condemning the country to years in the doldrums.
Disturbances unleashed by the killing of 15-year-old Alexandros Grigoropoulos this month have caused hundreds of millions of euros of damage and shaken Greece's fragile conservative government.
They have also encouraged trades unions to step up their challenge to education and pension reforms, and to privatizations cautiously introduced by the conservative New Democracy party during 4 years in power.
"Even before the riots, reform was proving difficult but now it is going to be very, very difficult," said Diego Iscaro, analyst at IHS Global Insight.
"To achieve sustainable growth in the medium term, these reforms must happen. In the next five years, growth will be slower than what we've seen for a decade." Greece's entry into the euro zone in 2001 helped fuel years of growth averaging 4 percent annually. Greece enjoyed access to European Union funds, low interest rates, robust exports to Balkan countries and a boom in shipping and tourism.
The prosperity masked weaknesses such as a current account deficit of 14 percent of GDP and one of the euro zone's lowest productivity rates.
Corruption ranks as the worst in the 15-nation euro zone, affecting education and health, and fostering anti-government resentment. A bloated public payroll -- used by political parties to reward supporters -- has kept the deficit high. Despite attempts to cut back, it hit 3.5 percent of GDP last year -- above the 3 percent ceiling at which Brussels can impose penalties.
Good times over
With the global crisis reaching Greece, the good times which hide these problems are over. Analysts said growth will dip under 1 percent next year, less than half government forecasts. Chris Pryce, analyst at Fitch Ratings, says Greece's most urgent problem is a pension system costing the government 13 percent of GDP a year. A cautious reform in March sparked union rage and criticism from the socialist PASOK opposition party.
"New Democracy has been extremely reluctant to introduce reforms. This year, after five years of doing nothing, it made fairly modest reforms," Pryce said. "PASOK would be more in thrall to its union supporters, who wouldn't dream of accepting any kind of reform." Few observers expect the riots immediately to topple the government, which trails in polls and has a one-seat majority after winning re-election last year despite devastating fires. However, its survival beyond the next few months is uncertain.
"A more likely possibility is that these protests carry on for a couple of months, if not more than that, necessitating a call for early elections," said Teymur Huseynov, head of Eurasia Division at Exclusive Analysis, a strategic intelligence firm. Analysts said the reforms opposed by unions could be the first steps towards curing high youth unemployment which fuelled the riots.
Labor groups agree on the need for pension and education changes, but slam Athens for its lack of consensus-building and its right-wing agenda. If the government falls, the only realistic alternative would be PASOK, which has a poll lead of five percentage points.
New Democracy recovered from criticism of its handling of last year's forest fires and officials said PMCostas Karamanlis is preparing a cabinet reshuffle to try to claw back PASOK's poll lead. "With the world economic crisis, whoever is in power will face unpopular choices to keep Greece stable," said Theodoros Livanios, head of research at pollster Opinion.Fresh clashes break out in Greece
Greek marchers hurled firebombs and stones at police outside the Greek parliament yesterday, while flights were grounded and public offices closed on a 13th day of anti-government protests since police shot dead a teenager. Protesters waving red flags jostled with police, who had formed a cordon around parliament, and attempted to burn down a Christmas tree in the square outside. Police fired teargas to disperse the crowd.
"Down with the government of blood, poverty and privatizations," read one of the banners among the 7,000 marchers protesting against social and economic reforms and the government's failure to shelter Greeks from the global economic crisis.
Rallies by unions, students and teachers also took place in the northern city of Thessaloniki and on the island of Crete, reported Reuters.
"We are not finished just because it's Christmas. We will continue and intensify our struggle in the next year," said spokesman for the GSEE private sector union federation.
As the Hürriyet Daily News & Economic Review went to press yesterday, youths in Istanbul prepared for a demonstration in an apparent show of support for rioting Greeks. Global Action Group, which was founded in 2005 to support the worldwide gathering against global warming, was set to gather in Taksim with the slogan "Money to banks, bullets to youth."
Adding to tensions in the Greek capital ahead of further protests planned for Friday, police said a 16-year-old had been shot in the hand by an unidentified gunman late Wednesday.
"Not only policeman carry guns," said police spokesman Panagiotis Stathis, strongly denying any officers were involved.
Disturbances unleashed by the killing of 15-year-old Alexandros Grigoropoulos this month have caused hundreds of millions of euros of damage and shaken Greece's fragile conservative government.
They have also encouraged trades unions to step up their challenge to education and pension reforms, and to privatizations cautiously introduced by the conservative New Democracy party during 4 years in power.
"Even before the riots, reform was proving difficult but now it is going to be very, very difficult," said Diego Iscaro, analyst at IHS Global Insight.
"To achieve sustainable growth in the medium term, these reforms must happen. In the next five years, growth will be slower than what we've seen for a decade." Greece's entry into the euro zone in 2001 helped fuel years of growth averaging 4 percent annually. Greece enjoyed access to European Union funds, low interest rates, robust exports to Balkan countries and a boom in shipping and tourism.
The prosperity masked weaknesses such as a current account deficit of 14 percent of GDP and one of the euro zone's lowest productivity rates.
Corruption ranks as the worst in the 15-nation euro zone, affecting education and health, and fostering anti-government resentment. A bloated public payroll -- used by political parties to reward supporters -- has kept the deficit high. Despite attempts to cut back, it hit 3.5 percent of GDP last year -- above the 3 percent ceiling at which Brussels can impose penalties.
Good times over
With the global crisis reaching Greece, the good times which hide these problems are over. Analysts said growth will dip under 1 percent next year, less than half government forecasts. Chris Pryce, analyst at Fitch Ratings, says Greece's most urgent problem is a pension system costing the government 13 percent of GDP a year. A cautious reform in March sparked union rage and criticism from the socialist PASOK opposition party.
"New Democracy has been extremely reluctant to introduce reforms. This year, after five years of doing nothing, it made fairly modest reforms," Pryce said. "PASOK would be more in thrall to its union supporters, who wouldn't dream of accepting any kind of reform." Few observers expect the riots immediately to topple the government, which trails in polls and has a one-seat majority after winning re-election last year despite devastating fires. However, its survival beyond the next few months is uncertain.
"A more likely possibility is that these protests carry on for a couple of months, if not more than that, necessitating a call for early elections," said Teymur Huseynov, head of Eurasia Division at Exclusive Analysis, a strategic intelligence firm. Analysts said the reforms opposed by unions could be the first steps towards curing high youth unemployment which fuelled the riots.
Labor groups agree on the need for pension and education changes, but slam Athens for its lack of consensus-building and its right-wing agenda. If the government falls, the only realistic alternative would be PASOK, which has a poll lead of five percentage points.
New Democracy recovered from criticism of its handling of last year's forest fires and officials said PMCostas Karamanlis is preparing a cabinet reshuffle to try to claw back PASOK's poll lead. "With the world economic crisis, whoever is in power will face unpopular choices to keep Greece stable," said Theodoros Livanios, head of research at pollster Opinion.Fresh clashes break out in Greece
Greek marchers hurled firebombs and stones at police outside the Greek parliament yesterday, while flights were grounded and public offices closed on a 13th day of anti-government protests since police shot dead a teenager. Protesters waving red flags jostled with police, who had formed a cordon around parliament, and attempted to burn down a Christmas tree in the square outside. Police fired teargas to disperse the crowd.
"Down with the government of blood, poverty and privatizations," read one of the banners among the 7,000 marchers protesting against social and economic reforms and the government's failure to shelter Greeks from the global economic crisis.
Rallies by unions, students and teachers also took place in the northern city of Thessaloniki and on the island of Crete, reported Reuters.
"We are not finished just because it's Christmas. We will continue and intensify our struggle in the next year," said spokesman for the GSEE private sector union federation.
As the Hürriyet Daily News & Economic Review went to press yesterday, youths in Istanbul prepared for a demonstration in an apparent show of support for rioting Greeks. Global Action Group, which was founded in 2005 to support the worldwide gathering against global warming, was set to gather in Taksim with the slogan "Money to banks, bullets to youth."
Adding to tensions in the Greek capital ahead of further protests planned for Friday, police said a 16-year-old had been shot in the hand by an unidentified gunman late Wednesday.
"Not only policeman carry guns," said police spokesman Panagiotis Stathis, strongly denying any officers were involved.