Greek leaders’ priorities questioned

Greek citizens have never believed that the deep spending cuts their country has made to avoid bankruptcy were distributed fairly. But top European officials are starting to worry about that, too.

Misgivings remain about whether Greek leaders are committed to instituting the tough policies they have promised in return for the money, not least because of a lingering sense that cuts will continue to hurt the poor far more than the powerful.

Despite those concerns, Greece will probably receive its second rescue in two years on Monday, when finance officials gather in Brussels to discuss a $170 billion bailout for the country.

Without it, Greece will run out of money by the end of March, with potentially dire consequences for the global economy as a whole.

Last week, the Greek Parliament approved measures that cut the minimum wage by 22 percent, effective immediately, but trimmed the salaries of the best-paid civil servants 10 percent, effective months from now. Angry rioters torched dozens of buildings in central Athens in reaction to the cuts.

But officials fought until the last moment to spare the largest public pensions from being touched, finally capitulating on Wednesday after European leaders threatened to scotch the bailout altogether.

The rollbacks in social spending, and policies passed last year that increase the tax burden on the poor, have prompted many Greeks to say their leaders are not always fighting for them.

“Politicians,” spat Akis Paputsis, a clerk at a hardware store in a seedy stretch of central Athens. “They’re all friends with each other.”

Until last week, Paputsis, 25, earned $983 a month before taxes, Greece’s minimum wage. With the legislation passed last week, it has dropped to $766, which both he and his girlfriend live on because she can’t find a job — the unemployment rate for those under 25 has soared to 48 percent.

After paying taxes and their $525 monthly rent, they have “nothing,” he said.

10 percent trim at the top

Greece’s largely ceremonial president, Karolos Papoulias, 82, decided last week to give up the $395,000 he was paid annually to receive foreign dignitaries, serve as a moral guide for the country and smooth over differences when the country’s squabbling politicians try to form a government. He announced through an intermediary that it was in solidarity with those who were suffering the most.

Germany’s finance minister, Wolfgang Schaeuble, who last week jousted with Papoulias over the ability of Greek officials to implement reforms, struck a more sympathetic tone toward regular Greeks in interview excerpts published Saturday, though he still managed to slip in a few implied jabs at their leaders.

“I really feel for the people of Greece,” he told the daily newspaper Der Tagesspiegel. “The vast majority now hard-hit by the reform and austerity measures . . . can do nothing about the backup in reforms, the loss of competitiveness and the unproductive use of funds in the past.”

Papoulias has given up all of his salary, but an average of 10 percent is what most top-paid public workers will have trimmed from their pay this year. Judges, doctors, diplomats and professors, along with uniformed personnel in the military and police, are paid on a wage scale separate from and higher than that of the standard public sector, such as ministry bureaucrats, hospital support staff and local government administrators.

Doctors who work in public hospitals make $79,000 a year on average, according to Greek Finance Ministry figures cited in the Kathimerini newspaper Saturday. Judges make $99,000 on average. The average pay for a public-sector worker who doesn’t fall into one of the special job classes is $27,000 a year, Kathimerini reported.

Until now, those on the separate, better-paying wage scales hadn’t been specially targeted, though they comprise a third of the public payroll, according to estimates by the International Monetary Fund and the European Union. The trims to the public salaries aim to further stanch the flow of Greece’s public spending, because the government is still paying out more than it takes in. The cuts to the minimum wage, on the other hand, affect the private sector and are an attempt to increase the competitiveness of Greece’s economy, whose salaries have been higher than others in the euro zone, discouraging investment.

‘It’s peanuts’

But the biggest fight of all — one that a German official said this week very nearly cost Greece its bailout — was over cuts to the highest pensions. Greece’s creditors had demanded the trims, arguing that the most vulnerable people would not be affected by them, but politicians had resisted, leaving a $178 million hole in the proposals. In the end, Greece capitulated, though it made fewer pension reductions than European leaders had requested.

A monthly pension of $1,975 has been reduced by about $32, or 1.6 percent, for example, Prime Minister Lucas Papademos told the Greek cabinet Saturday, describing the negotiations with European officials as “thorough and lively.” (A European official, who spoke last week on the condition of anonymity, said the back-and-forth had been “like kids in a schoolyard.”)

“The impact . . . is milder than what it appears,” Papademos said. It “could not be avoided.”

Several E.U. officials have suggested in recent weeks that distrust of Greece is so widespread that the bailout money might be channeled into a special escrow account usable only to make debt payments. The details will probably be finalized this week.

For now, some Greeks sympathize with the Europeans’ raised eyebrows over the turmoil in their country.

Cuts of $178 million to get a bailout of $170 billion “is just peanuts, and they cannot agree on it?” said Panos Tsakloglou, an economist at the Athens University of Economics and Business and an adviser to the Greek government.

“But at the same time, on the German side — it’s peanuts, too,” he said.

Special correspondent Elinda Labropoulou contributed to this report.

Michael Birnbaum is The Post’s Moscow bureau chief. He previously served as the Berlin correspondent and an education reporter.
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